Reverse Mortgage Purchase
Reverse mortgage loans can provide you with the ability to buy a new home without the cumbersome mortgage to think about. But why would you even consider selling your house?
While most homeowners would like to hold on to the house they worked hard to put up, others have compelling reasons to leave their old home. Without the children around, they find the house too big for their needs. With rising cost of maintenance, it might no longer be practical to keep a huge house.
Other retirees also apply for reverse mortgage loans so that they can move to a home that is near their children and grandchildren. Rather than spending money travelling to be close to their loved ones, they purchase a new house that will allow them to visit their loved ones more frequently.
For others, a reverse mortgage purchase loan allows them to pursue their dream of retiring in a place of their choosing - a house near a beach perhaps or even a retreat in the mountains. Contact us today to learn more about reverse mortgages and to find out if a reverse mortgage for purchase is right for you.
How Do Reverse Mortgage Loans Work?
Reverse mortgage loans for purchase allow you to purchase a new home without taking up a new mortgage and without monthly payments. Simply put these loans are designed to allow you to combine proceeds from the sale of a previous residence with a reverse mortgage in a single transaction. Here is how it works:
1. Sell your own home: Based on the condition and value of your home, you can generate funds that you will need to buy a new home. Let us say for example that your house sells for $500,000. Assuming you still owed $200,000 on your home that means that you have an available $300,000 to buy a new home.
2. Buy Your New Home: You can then look for a new home that meets your requirements. If this new home costs $300,000. With your money on hand, you can buy the house immediately. However, this scenario uses all of the money collected from the sale of your home, leaving you with nothing left for other expenses that may come along.
So how can you use a reverse mortgage loan to your advantage?
With a reverse mortgage for purchase, a similar scenario could look like this:
Sale of your existing home: $500,000
Pay off existing mortgage: $200,000
Available cash after payoff: $300,000
New home purchase price: $350,000
Down payment: $200,000
Complete purchase with HECM: $150,000
Monthly mortgage payment: $0
Remaining proceeds from Reverse Mortgage Loan: $100,000
In this scenario, you can use a reverse mortgage to pay off your existing home and finance the purchase of a new home while also providing extra money that can be used at your disposal.
Benefits of a Reverse Mortgage for Purchase
By using a reverse mortgage loan for purchasing a new home, you experience many benefits.
- Because a reverse mortgage for purchase combines the process into one transaction, you pay closing costs only once instead paying during the purchase and refinance to access additional funds.
- Your loan proceeds are tax-free.
- Reverse mortgage loans allow you to increase your discretionary cash and expand your retirement horizon. You can dream of bigger things or experience new adventures.
- You are not burdened by a monthly mortgage payment because your new home is paid in full.
- Reverse mortgages can be used to pursue whatever reason you have for buying a new home.
To learn how to start the process of getting a reverse mortgage or to learn more about reverse mortgage loans, contact us at Advantage Home Loans Corporation today online or by phone.