- Use the funds from a reverse mortgage to complete a purchase of a new home.
- Any funds not used towards the home purchase can be used for other purposes.
Use a reverse mortgage to purchase a new home
In 2009, HUD began allowing seniors to use a reverse mortgage to purchase a new primary residence. The new home must be occupied within 60 days after the date of closing. This option is great for seniors looking to downsize into a newer, smaller home.
HECM for Purchase Example Scenario 1
Bill is 65 years old and has a three bedroom home valued at $300,000 with no mortgage balance. He would like to move into a newer and better home in Los Angeles worth $400,000. If Bill sells his home, he would be short $100,000 and be unable to move into the new home. With a reverse mortgage, however, Bill can receive about $213,000 on the $400,000 Los Angeles property and use the proceeds to purchase the home. As result, Bills now has a fund of $513,000 ($300,000 from the existing home sale and $213,000 from the reverse mortgage). Bill purchases the new home for $400,000 and has $113,000 in cash remaining.
HECM for Purchase Example Scenario 2
Emily is 62 years old with a home valued at $200,000 and a mortgage balance of $60,000. She has found a home in Miami worth $300,000. In her current situation, Emily would be short $160,000 to buy the Miami home. Emily therefore decides to take out a reverse mortgage loan on the $300,000 home and receives about $152,000. With the reverse mortgage proceeds and the sale of her existing home, Emily has $292,000. She makes up the difference with $8,000 in her savings and completes the purchase. Emily now has no mortgage payment on her new home
Loading more commentsSince you don't have facebook, please provide us with your location and a valid email address so we can answer it. Without a valid email address,we can't reply. (Go back to login with Facebook)
Due to the high volume of comments received, we cannot publish and/or respond to every comment received. If you have a specific question, we recommend you search our site for an answer before commenting.
* Bills.com will not share, sell, lend, or make public your e-mail address. We reserve the right to delete any questions or comments that violate the Bills.com terms of service.
We get a lot of comments! To help us show our boss that this is a valuable service, so we can keep providing it, we ask you to do 2 things before commmenting:
Log in
Like us
Submit your comment!
Due to the high volume of comments received, we cannot publish and/or respond to every comment received. If you have a specific question, we recommend you search our site for an answer before commenting.
* Bills.com will not share, sell, lend, or make public your e-mail address. We reserve the right to delete any questions or comments that violate the Bills.com terms of service.
Thank you for your comment. Your comment will be posted shortly.
No Comments