One of the questions I have been getting asked most over the past year is “Can I REALLY buy a house with a Reverse Mortgage?” The answer is yes you can, as long as you meet the requirements. But before we get into that let’s talk about what a Reverse Mortgage for Purchase can do for you.
One of the best uses for the Reverse Mortgage for Purchase is when you want to downsize from a larger home to a smaller one (or moving into your dream retirement home on the coast, golf course or in the mountains). Using the RM for Purchase gives individuals 62 or older the option of purchasing a home without using all of their personal resources they may have gained from the sale of a previous home or from their retirement accounts.
Is there a down payment?
Yes, both the down payment and the amount of the mortgage you can qualify for are based on the sales price (or value) of the new home along with the borrower’s age and the current interest rates of the day. Currently there are no specific credit score or debt-to-income ratios required, but the lender will need proof of the funds necessary for the down payment and closing costs and will also verify you have the residual income to continue to cover taxes, insurance, HOA dues and maintenance of the home (see Financial Assessment below).
What is the Financial Assessment I’ve heard about?
There is a required “Financial Assessment” and its purpose is to better protect borrowers and the Reverse Mortgage Program from too many defaults on taxes, insurance and maintenance issues. The lender will need to ensure the borrowers have the financial capacity to remain in this home the rest of their life while still meeting their obligations. Borrowers will need some additional documentation including such things as:
- Income and tax forms (paystubs, W2’s or 1090’s, social security or pension awards letters)
- Payment history for various debts if not included on the credit report
- Documentation of assets currently owned or in the bank (monthly or quarterly bank statements)
- A copy of the contract for any home being sold to obtain the down payment.
While the Financial Assessment may make it tougher for some borrowers to qualify don’t assume your credit or delinquent debt will disqualify you. Even if you have had a few issues, the lender may be willing to work with the borrower depending on the specific situation or use a type of prepaid escrow account to pay future taxes and insurance.
What are some of the other advantages of Purchasing a home with a Reverse Mortgage?
- There are NO monthly mortgage payments (homeowners must keep property taxes, insurance and HOA dues paid current) and repayment of the loan does not occur until the last borrower no longer occupies the home.
- Interest and FHA Mortgage Insurance is all added to loan balance and loan repaid upon sale of the home or the heirs have other options to purchase the home or pay off the loan balance themselves.
- There is NO recourse to the borrower or their heirs if the loan cannot be repaid once the last borrower is no longer occupying the home as their primary residence. You will never owe more than the home is worth and can do a deed in lieu with no recourse to the estate.
- If you put down MORE than required as a down payment, the remaining equity can be left in a line of credit and drawn from at any time in the future.
- If the home is NEW construction, you may NOT start the loan application or an appraisal until the certificate of occupancy or similar is issued.
To find out more about how a Reverse Mortgage for Purchase can work for you call Melinda Hipp , CRMP with Open Mortgage at 210-493-7332, email at firstname.lastname@example.org or visit texasreverse.net to learn more.
More about Melinda Hipp and Open Mortgage -
Melinda Hipp is Branch Manager with Open Mortgage|San Antonio and specializes in working with senior homeowners 62 and over who would like to access the equity in their home through a Reverse Mortgage. She has handled hundreds of satisfied Reverse Mortgage clients over the past ten years with many raving fans. She and her team are dedicated to giving you boutique service, a quick closing and personalized customer service.
Melinda regularly provides training to local real estate professionals and holds the designation of MBA, CRMP (Certified Reverse Mortgage Professional) and CMC (Certified Mortgage Coach.) Melinda is also an active member of NRMLA (National Reverse Mortgage Lender’s Association). An avid golfer, Melinda was a charter member of the San Antonio Chapter of the Executive Women’s Golf Association. She is currently a member of the National Reverse Mortgage Lender’s Association, Women’s Council of Realtors, San Antonio Board of Realtors, CRS and a board member of Golf San Antonio.
Melinda Hipp, CRMP | NMLS #219085
1870 W. Bitters Rd., Ste. 202
San Antonio, TX 78248
Toll Free: 844-265-5513