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Reverse Mortgage for Purchase
Example and Basics
Thanks to the 2008 Housing and Economic Recovery
Act, you can now purchase a new home and take
out a reverse mortgage on that home in one
transaction. By using a reverse mortgage on your
new house to cover part of the purchase price,
you can have more cash on hand because less of
your money will be tied up in your new house.
Plus, by purchasing the house and getting a
reverse mortgage in one transaction, you will
have fewer closing costs.
The most common scenario for using a reverse
mortgage for purchase may be current homeowners
deciding to sell their home and move in to a
smaller one (downsizing). Here's an example:
Original house: $450,000
Price of smaller
house: $185,000
- Reverse mortgage: $116,000
- Sale price of original house: $450,000
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= Cash left over: $381,000
Cash left over: $381,000
Don't want to sell or not a homeowner?
If you do not currently own a home or if you
don't want to sell your home, you can still use
a reverse mortgage for purchase. The
requirements are that you have the funds
available to cover the purchase price of the new
house, minus what you receive from the reverse
mortgage, and also that the new house is your
primary residence.
Some people who already own a home and who
have other funds available, may choose to
purchase a new home but keep the other house as
a rental property to generate ongoing income.
Have Questions? Call us anytime at
1-866-571-3662.
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