Reverse Mortgage for Purchase
Purchase FAQs
1. I thought reverse mortgages were only used to
refinance my current house, not buy a new home?
You can now use a reverse mortgage to move, or
stay in your current house.
2.
What are the advantages of using a reverse
mortgage to downsize and move to a new home?
There are NO PAYMENTS when you use a reverse
mortgage for a new home.There are no credit or
income requirements or pre-payment penalties
that come with traditional forward mortgage.
Sophisticated seniors are using them to stay
liquid when they downsize.
3.
Do you need to sell your current property before
you use a reverse mortgage to finance a new
home?
No, not necessarily, but your new home must be
your primary residence and you must move within
60 days after closing.
4.
What does it take to qualify to use a reverse
mortgage to finance a new property?
The loan amount is based upon your age and the
lesser of the appraised value or sales price. It
must be your primary residence. Gifts, loan
discounts, builder incentives from the seller or
any other party are prohibited by FHA.
5.
What are the costs?
The new law that went in to effect in the fall
of 2008 imposes a $6,000 cap on origination
fees. Lenders can charge 2 percent of the first
$200,000 of the loan's value, plus 1 percent of
any additional loan value. FHA insurance, which
protects consumers against values dropping and
lender failure, is charged at 2 percent.
6.
Is there a credit line to access like other
reverse mortgages?
Yes, if you choose not to use all of the reverse
mortgages funds toward the purchase of your new
home. Even if you do use all of the funds, you
will have a credit line as your home appreciates
in value.
7.
How should I compare all of my options on
financing a new home: "cash down," "traditional
mortgage," and "reverse mortgage for moving?"
The best way to think through your choices is by
asking yourself how much money you have and
need, how much money you can afford to have
invested in your house, and whether or not you
can afford monthly loan payments.
8.
Who owns the house?
You own the house. The title is in your name.
Have Questions? Call us anytime at
1-866-571-3662.
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