HECM for Purchase
Purchase a New Home with a Reverse Mortgage
Not many people realize that a reverse mortgage can be used to buy a new home. Also called a “HECM for Purchase,” this type of loan helps you accomplish two goals with a single transaction – buying a new home while securing a reverse mortgage. Many seniors like this option because it can help save money by reducing closing costs since a single loan is taken out. This can also make the home buying process faster and easier for seniors.
Buy a New Home Without Monthly Mortgage Payments1
It’s not too good to be true! A HECM for Purchase is just a reverse mortgage designed to help homeowners 62 and older buy the home they need, while meeting their financial and retirement goals.
If you qualify, you can use a HECM for Purchase reverse mortgage to relocate to a home that’s closer to your family; one that’s more physically accessible; or one that’s a better fit for your current or future needs. This is a great option for homeowners looking to downsize.
Of course, a HECM for Purchase reverse mortgage is still a loan, so interest does accrue on the portion of the loan amount disbursed. As with any home, the homeowner is responsible for paying for property taxes, insurance premiums, and necessary maintenance.
HECM for Purchase: How it Works
- If you qualify, you can buy a home or FHA approved condo as your principal residence by taking out a HECM reverse mortgage on that property.
- Using proceeds from the sale of your current home, or cash on hand, you make a down payment (usually 40% to 50% of the cost of the new home.)
- The balance of the purchase is covered by your HECM proceeds—any remaining funds can be used as you choose.
- There’s just a single closing, as the home purchase and HECM reverse mortgage are executed in one transaction.
- You make no monthly mortgage payments on the new home1.
- You own the home—not the bank—and you can continue to live in it, as long as the terms of the loan are met.
- The loan is repaid, including principal plus accrued fees and interest, when the last surviving homeowner vacates the property for 12 months of the home or passes away.
What are the Next Steps?
If you are considering using a reverse mortgage to buy your retirement home, the next step is to use our free calculator to get an instant quote. You will see all the options available to you and can expect to receive a call from a Longbridge loan officer. After discussing your needs and situation, we can help you determine if a reverse mortgage is the right type of loan for you. If it is, we will proceed with the application process and begin working on your loan.
Want to learn more on how you can buy a house with reverse mortgage proceeds? Check out our article, here.
1You must continue to pay property taxes, insurance, and for home maintenance.
