Reverse mortgages have been around for nearly 20 years but many Realtors® are unaware that reverse mortgages are also available for home purchases.
Peter Brown
The home equity conversion mortgage (HECM) is an alternative financing source available to seniors who are 62 and older, according to Peter Brown, a mortgage lender for 15 years, currently with United Northern Mortgage Bankers.
Brown will be giving a presentation on “Reverse Mortgage and Reverse Mortgage for Home Purchase” at Triple Play Convention on December 9.
“We’re finding that many people are just becoming aware of the reverse mortgage for home purchase,” Brown said. “As Realtors® become aware of the product, more consumers are taking advantage of it. It really opens the door for seniors who might not be approved for traditional financing because there are no income or credit requirements.”
Within the reverse mortgage for purchase or HECM, seniors are able to buy a home using some of their own funds as a down payment in the transaction, and the rest is financed through a reverse mortgage.
Brown said in a $250,000 home, a 67-year-old senior would have to bring approx. $130,000 to closing. The remainder would be provided through a reverse mortgage with no monthly payment. “There’s no income requirement, no obligation to make a payment,” he said. “We would pull a credit report, but that’s only to determine if there are any liens.”
Lenders receive their payment when the home is no longer the residence of the final borrower. The property is either sold through an estate sale or an heir can pay off the loan. The estate is handled in the same manner as a traditional sale.
“The younger the senior is, the more of their own funds they would have to bring to the table,” Brown explained. “And all the same fees associated with a traditional real estate purchase transaction will apply.”
Brown will be presenting “Reverse Mortgage and Reverse Mortgage for Home Purchase” at the Triple Play Realtors® Convention in Atlantic City, on December 9.
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