Reverse Mortgages Are Very Popular

Reverse Mortgage For Purchase Reverse mortgage products or Home Equity Conversion Mortgages (HECM) are becoming more popular with seniors and baby boomers who are reaching retirement age. A reverse mortgage for purchase can be used for those seniors who are thinking about selling their existing home to downsize to a smaller Walnut Creek home or retirement property and don’t want monthly mortgage payments. Borrowers are still responsible for paying their property taxes, maintaining the property and carrying insurance. Here is how a reverse mortgage for purchase might work. Mr. and Mrs. Wilson sell their existing home and have remaining cash to close on a new property totaling $150,000. The Wilsons want to buy a Walnut Creek retirement property at the award winning senior active adult community Rossmoor for $250,000. The Wilsons have spoken with their Walnut Creek real estate agent who has referred them to a reverse mortgage specialist at Wells Fargo Home Mortgage. Their loan specialist has qualified them for a $100,000 reverse mortgage. By taking the cash from the sale proceeds from their home and using their reverse mortgage proceeds, the Wilson are now able to purchase their Walnut Creek retirement property. The Wilsons don’t have to worry about making a monthly mortgage payment while they live in their new property. They can use their retirement income for other family expenses, a vacation, medical bills or helping their children or grandchildren. Reverse Mortgage Qualifications To qualify for a reverse mortgage, the borrower must be 62 years of age or older. No payments are required until you move out of the property or the last borrower who resides at the property passes away. Interest accrues on the loan though. When the home is sold, the loan balance is paid off. If you and your spouse are purchasing the property, be sure to put both names on the mortgage so that if one spouse dies, the other will be able stay in the home and does not have to worry about making any mortgage payments, a conversation with your tax advisor and Attorney is strong advised. The biggest criticism about reverse mortgages is that standard reverse mortgages frequently require high upfront fees. Last year, FHA, who oversees the HECM program for HUD, introduced their HECM Saver loan with lower upfront fees than the standard HECM loan, although they pay a smaller percentage of the home’s equity than the regular HECM. While a reverse mortgage may not be for all seniors, especially those who want to leave their property to their heirs. However, for seniors that need extra cash to use for everyday living expenses, medical bills, emergencies or other family uses, reverse mortgages are the perfect solution.