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Enjoy your retirement on your terms.
Would you like to move to a house with modern amenities? Maybe you’d like to move closer to your children and grandchildren. Is your home too large now that the nest is empty? Whatever the reason, you might be wishing for a new home but didn’t think you could buy one.
In the past, your options were limited, but now there may be a way for you to achieve your dream of a new home: the Home Equity Conversion Mortgage for Purchase (H4P for short). The H4P lets seniors aged 62 and older purchase a home with approximately 50% down, helping you retain more of your financial nest egg.
If you’re eligible and want to move into a new home, the H4P can provide:
- Greater home purchasing power
- The ability to move into a home that better fits your needs
- Reduced out-of-pocket expenses since there is no monthly mortgage payment*
- Being able to retain more of your life savings
- You keep the title to your home
How much do you need for a down payment?
The matrix below demonstrates the increased home purchasing power gained by Americans (62-and-older) who use H4P.***
To use the matrix, match your age (on top of the chart) with the desired home purchase price (on the left side). The number where the age and purchase price intersect is the amount of down payment you will need at closing.
*Must maintain property as primary residence and keep property taxes, insurance and HOA dues current.
**In Texas all borrowers must be 62 or older.
*** This calculation is based on youngest borrower at age 65 using HECM Fixed Rate of 4.81% as of October 2, 2017. Recent interest rates range from 5.71- 6.26 APR. Loan charges will include origination fees, mortgage insurance premiums, and settlement costs which are to be determined. Most of these fees may be financed into the loan. Interest rates and funds available may change without notice and not be available at time of the loan commitment. Prices subject to change. This information is for illustrative purposes only. Estimated fees, including up-front FHA mortgage insurance premium, range from $3000 – $12,000 depending upon the value of the home (included in mortgage). Closing costs vary from state to state and can affect down payment. Please check with your HECM Loan Officer for actual figures. Your loan balance and accrued interest will become due upon a maturity or default event such as no longer living in the home as your principal residence, failing to pay your hazard insurance or property taxes, or failing to maintain your property.
Must be 62 years or older
Live in home as primary residence; vacation homes and investment properties do not qualify
Complete a HUD-approved counseling session
Must be able to pay homeowners taxes, insurance, and any applicable HOA fees
Things to Know
At the conclusion of a reverse mortgage, the borrower must repay the loan and may have to sell the home or repay the loan from other proceeds
Charges will be assessed with the loan, including an origination fee, closing costs, mortgage insurance premiums and servicing fees
The loan balance grows over time and interest is charged on the outstanding balance
The borrower remains responsible for property taxes, hazard insurance and home maintenance, and failure to pay these amounts may result in the loss of the home
Interest on a reverse mortgage is not tax-deductible until the borrower makes partial or full re-payment
For more information about Home Equity Conversion Mortgages, click the link below to receive our free eGuide.