Thinking of Buying A New Home in Retirement? A Reverse Mortgage for Purchase Can Help
Retirement planning is all about careful preparation, but life has a knack for throwing unexpected curveballs. Whether it’s a sudden medical event or the desire to be closer to family, sometimes it’s necessary to make a move to a new home. While moving can be a daunting process, there’s a financial solution that offers flexibility and peace of mind: Purchasing with a Reverse Mortgage.
So, what’s the buzz all about? Well, a Reverse Mortgage allows you to purchase a new home and finance it with a reverse mortgage, all in one fell swoop. Let’s delve into how it works and how it can benefit you.
Here’s the lowdown:
Step one: Mortgage lenders assess the value of the new home and consider the age of the borrower to determine the Reverse Mtg. amount. The difference between this amount and the sales price is what the borrower needs to contribute from the proceeds of their current home sale.
Step two: Here’s where the magic happens. Imagine you own a mortgage-free $600,000 home, and you’re looking to downsize in retirement by purchasing a $400,000 home near your loved ones. With an HECM for Purchase, you could secure between 40-60% of the new home’s value. Let’s say you qualify for 60% of the purchase price. That means you’d only have to pay 40% of the purchase price out of pocket, which you will have from the sale of your former home (with money left over to put in the bank or decorate your new home). Suddenly, you have more financial freedom to cover medical expenses or bolster your rainy-day fund. Remember, repayment of the loan only becomes due when the borrower(s) passes away, moves out, or decides to sell the home.
But wait, there’s more:
If you’re dreaming of an upgrade, a Reverse mortgage can grant you even greater buying power. Picture yourself settling into a brand-new home, free from the burden of a monthly mortgage payment. However, do keep in mind that as the borrower, you remain responsible for property taxes, hazard insurance, and home maintenance.
Of course, this might not be suitable for everyone, but it’s an incredible option for seniors seeking a fresh start and additional funds. If this sounds like the solution you’ve been searching for, don’t hesitate to reach out to an Open Mortgage loan officer today.
Remember, at the conclusion of a reverse mortgage, the loan must be repaid, often through the sale of the home or other means. There will be associated charges, such as an origination fee, closing costs, mortgage insurance premiums, and servicing fees. It’s important to note that the loan balance grows over time, with interest charged on the outstanding balance. While interest on a reverse mortgage isn’t tax-deductible until partial or full repayment is made, the borrower’s responsibility for property taxes, hazard insurance, and home maintenance remains crucial to protect their investment.
Embrace the future and unlock the power of HECM for Purchase—your gateway to a new chapter in life.