Can I Use A Reverse Mortgage To Purchase A Home?

Can I Use A Reverse Mortgage To Purchase A Home

If you or your spouse are 62 or older, you can use a Home Equity Conversion Mortgage (HECM) to
purchase a home as long as it is your primary residence.

What Is A Reverse Mortgage?

The FHA insured reverse mortgage program is called a Home Equity Conversion Mortgage, (HECM). This is by far the most common reverse mortgage program available.
A reverse mortgage is a loan that is specifically designed for people age 62 and older which allows you to convert a portion of the value of your primary
residence into cash that you never have to repay as long as you or your spouse live in the home.

While you never have to make a mortgage payment, the house stays in your name so you do have to keep current on the property taxes and homeowners insurance
premiums as well as maintain the home – basically, everything you’d do if you owned it free and clear.

Keep in mind that the reverse mortgage is still a loan and eventually needs to be repaid. However, you do not repay it on a monthly basis from your budget.
The loan only comes due when neither you or your spouse are able to live in it as your primary residence. Because you are not making any payments,
the interest and mortgage insurance that you would pay on a normal FHA loan every month is added loan balance. This is the reason the amount owed on
the reverse mortgage increases.

What Can I Do With A Reverse Mortgage?

Reverse mortgages are designed to help older homeowners by allowing them to access additional funds from the equity in their home without worrying about
how to pay it back. These funds can be used for health care cost, living expenses, to upgrade your standard of living, to help family with college
education, or any other reason you need funds. There is really no limit on the what you can use the money for. More recently, it has become a financial
planning tool with the “stand-by line of credit” and “reverse mortgage for purchase” programs.

There are multiple ways to receive the funds from a reverse mortgage:

  • 1.You can set up a monthly payment (where the bank pays you)
  • 2.You can use it as a line of credit
  • 3.You can take it as a lump sum (some restrictions apply)
  • 4.Or any combination of the above

How Much Money Can I Get From A Reverse Mortgage?

Generally speaking, the older you are and the more equity you have in your home, the more money that you can receive from a reverse mortgage. In 2015 HUD
set some restrictions on the amount of money that you can receive during the first 12 months of the loan, but there are no restrictions after that.

How Does The Reverse Mortgage For Purchase Program Work?

In 2009 HUD began allowing people who are 62 and over to use a reverse mortgage to purchase a new primary residence. The reverse mortgage loan is placed
against the home you are purchasing, just like a regular mortgage would be, and then you would bring the remaining funds to the closing in the form
a down payment.

The reverse mortgage for purchase program allows you to right-size to a new primary residence that fits your lifestyle. It may be closer to family, or
downsizing to a ranch style home or any other number of reasons. Typically, it is to a home that will improve your standard of living and a place that
you want to stay for the foreseeable future.

The reverse mortgage will not pay for 100% of the purchase price. You can usually finance between 50-70% of the value of the home with the reverse mortgage
for purchase program. The home will be in your name so you will have to make sure to budget for your property taxes and homeowners insurance as well
as any HOA dues and maintenance. But as long as you live there, you will never have to make a mortgage payment.

To summarize, not only can you get a home that’s more suited to your lifestyle or closer to family and loved ones, you can get it without depleting your
savings or retirement accounts and without having to make a mortgage payment out of your fixed monthly income.

Who Can Qualify For A HECM Reverse Mortgage For Purchase?

You or your spouse must be at least 62 years old in order to qualify for a HECM reverse mortgage and the new home must be your primary residence. Since
you will be making a large down payment on the new home, typically 30% – 50%, it helps if you have substantial equity in the home you are selling or
own it outright. The new home you are purchasing with the reverse mortgage must meet FHA standards and you cannot have and delinquent federal debt.
Finally, you will need to qualify with enough income so the lender is sure that you can afford to pay for your property taxes, homeowners insurance
and maintenance.

What Kind Of Homes Are Eligible?

 The following homes are eligible under the HECM reverse mortgage for purchase program:

  • Single Family Homes
  • Townhomes
  • 2-4 unit Homes *
  • Manufactured Homes **
  • FHA approved Condominiums

New construction homes are eligible but must be 100% completed with a certificate of occupancy issued before you can begin an application for a reverse
mortgage.

*2-4 unit homes are eligible but one unit must be owner occupied and most lenders require a history of property management by the buyers.

**Manufactured homes are eligible but must be on land that you own and be 1976 or newer model with a permanent foundation. Other requirements also exist.

Are There Disadvantages Of HECM Reverse Mortgages?

It is best to talk with a reverse mortgage specialist to get the pros and cons and see if a reverse mortgage is right for your specific situation. One
reason that a reverse mortgage is not right for some people is because of the loss of future equity. You can sell your home at any time when you have
a reverse mortgage, but you will not have as much equity in your home as you would with a regular mortgage. However, you also might enjoy your time
in the home more since you won’t be making a mortgage payment.

If you pass away while living in the home, your heirs will inherit the home as well as any equity that is available. They have up to 12 months to either
sell or refinance the home to pay off the reverse mortgage. If there is no equity in the home, the heirs can simply give the home to the bank and walk
away with absolutely no recourse.

If you think it might be time to right-size your home and life with a reverse mortgage for purchase, you should schedule a consultation with a reverse
mortgage specialist in Colorado to get details and find out if this dynamic financing option is right for you.

Picture of Bruce Simmons

Bruce Simmons

I absolutely love what I do - working with senior homeowners to help them live a more comfortable, flexible and secure retirement. I have the absolute best customers in the world, and even though I worked in the forward mortgage business for a number of years, I could never go back to doing conventional loans. I'm a 100% reverse mortgage specialist.

5.0

My wife and I are retired and had a mortgage that was quite high. We contacted Bruce regarding a Reverse Mortgage and were pleased with his knowledge and experience. He made the whole process very easy and explained everything along the way. Since then, I have had a couple of questions and contacted him regarding the RM. Bruce has always been very responsive and returned our calls within minutes. We couldn't be happier having used Bruce for the Reverse Mortgage and highly recommend him.

Bruce has been serving my interest over and above what one might expect during the whole process of handling my reverse mortgage dating back to 2010 and continues to be available at present whenever a question may arise. He is one of the most reliable, trustworthy and knowledgeable experts regarding reverse mortgages that I have had the privilege to do business with! I would highly recommend Bruce to anyone who is considering a reverse mortgage. Thank you Bruce!

I met Bruce from a referral who just love what he did for them on their Reverse Mortgage, So I contacted Bruce and told him my story and he came up with a great Reverse Mortgage for me and my needs and now I am living good and not worrying about Finances anymore. He had it done in a timely manner. If you are looking for the MAN to help you get the best Reverse Mortgage you need to call him and hope you let him help you.

Bruce is one of the most professional, knowledgeable and efficient experts I have worked ŵith ever in any field. He is fast to answer and always ready to help...and he's a great guy!

Gerald Cook
Gerald Cook
5.0

Bruce did our original reverse mortgage and has also refinanced it twice. He works hard to get the best deal possible while making it as easy for us as possible. When our first refinance received a low initial appraisal, Bruce helped the appraiser find better information and increase the appraised value. He's the best.

I was hesitate about getting a reverse mortgage until Bruce Simons put my mind at rest. He is easy to work with, extremely knowledgeable and efficient. Things get done and he will make sure that you understand every part of the process. I interviewed several other people and he was hands down.....The only choice.

Doing a Reverse Mortgage is a major decision, when working with Bruce he came out personally to go over every thing in detail, there was no pressure to finalize the transaction, I had even put the loan on hold for awhile even though I had locked in my rate, I had called Bruce off and on for a few weeks to ask questions that I had concerns about and he was always available to talk to me. In the end it gave me time to feel comfortable about my decision to move forward with the Reverse. Bruce was very pleasant to work with and would certainly recommend Bruce if you are going to consider a Reverse Mortgage.

Bruce Simmons at American Liberty is one of the best in the reverse mortgage industry. I have known and worked with him for years and he always does a great job. You are in good hands with Bruce and know that he will take good care of you or your loved ones every step of the way.

Best thing I ever did! Bruce Simmons at American Liberty Mortgage is the best. He is always there to answer your questions, and can easily explain the whole idea of a Reverse Mortgage. He takes the time and goes through the entire process with you. It worked out so well for me. Thank You Bruce!

We had researched Reverse Mortgages for 5 years and after hearing about Bruce Simmons and meeting with him, we finally decided to move forward with the Reverse Morgage. It has been over a year now and we are still very pleased with our decision. We think Bruce is very professional, knowledgeable and honest. Thank you, Bruce, for all your help.

I first met Bruce Simmons 2017. I found him on the internet. I was looking for someone local. I called him and explained I was only looking into doing a reverse mortgage, so I did not want him to think this was something I was ready to do. Bruce was friendly, very open about the basics of a reverse mortgage. Bruce came to my home and presented the figures and other details that he could offer. The first thing that impressed me was this was not a hard sell, more of a informational meeting. He was very open about all of the details, and answered my questions without hesitation. What really was evident was he was establishing a relationship with me, and I realized he knew I would not take the loan at that time. There was not enough equity in my home, and I would have to bring money to the table. Although I was not ready to do a loan, Bruce assured me he is always available for questions. Four years later, I finally did do a reverse mortgage, and I couldn't be happier with having done it. I have done away with a mortgage payment which allows me to fund my retirement account with that mortgage payment. We did some much needed landscaping with our cash out transaction, and will move on to improvements inside of the house. My reverse mortgage has a line of credit, and I feel sense security knowing it is there if I need it. Bruce explained that a reverse mortgage is not for everyone, but I feel certain that he paved the way for a strategy that worked for me. I will definitely do a refinance when the time is right. I will check in with Bruce to be sure what the benefits are when I do it again.

I have worked with Bruce Simmons for 15 years. Bruce is one of the best in the industry. He is extremely knowledgeable, kinds and detailed in what he does. His clients love working with him and trust him to help them with their Reverse Mortgage loans. I would recommend Bruce to anyone I know that is thinking about or wanting to do a Reverse Mortgage. He will always take very good care of the customers and make sure their needs are met! Class act and one of the best in the industry by far!

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John Addante
John Addante

Left us a 5 star review

My wife and I are retired and had a mortgage that was quite high. We contacted Bruce regarding a Reverse Mortgage and were pleased with his knowledge and experience. He made the whole process very easy and explained everything along the way. Since then, I have had a couple of questions and contacted him regarding the RM. Bruce has always been very responsive and returned our calls within minutes. We couldn't be happier having used Bruce for the Reverse Mortgage and highly recommend him.

Bruce has been serving my interest over and above what one might expect during the whole process of handling my reverse mortgage dating back to 2010 and continues to be available at present whenever a question may arise. He is one of the most reliable, trustworthy and knowledgeable experts regarding reverse mortgages that I have had the privilege to do business with! I would highly recommend Bruce to anyone who is considering a reverse mortgage. Thank you Bruce!

I met Bruce from a referral who just love what he did for them on their Reverse Mortgage, So I contacted Bruce and told him my story and he came up with a great Reverse Mortgage for me and my needs and now I am living good and not worrying about Finances anymore. He had it done in a timely manner. If you are looking for the MAN to help you get the best Reverse Mortgage you need to call him and hope you let him help you.

Bruce is one of the most professional, knowledgeable and efficient experts I have worked ŵith ever in any field. He is fast to answer and always ready to help...and he's a great guy!

I was hesitate about getting a reverse mortgage until Bruce Simons put my mind at rest. He is easy to work with, extremely knowledgeable and efficient. Things get done and he will make sure that you understand every part of the process. I interviewed several other people and he was hands down.....The only choice.

Doing a Reverse Mortgage is a major decision, when working with Bruce he came out personally to go over every thing in detail, there was no pressure to finalize the transaction, I had even put the loan on hold for awhile even though I had locked in my rate, I had called Bruce off and on for a few weeks to ask questions that I had concerns about and he was always available to talk to me. In the end it gave me time to feel comfortable about my decision to move forward with the Reverse. Bruce was very pleasant to work with and would certainly recommend Bruce if you are going to consider a Reverse Mortgage.

Bruce Simmons at American Liberty is one of the best in the reverse mortgage industry. I have known and worked with him for years and he always does a great job. You are in good hands with Bruce and know that he will take good care of you or your loved ones every step of the way.

Best thing I ever did! Bruce Simmons at American Liberty Mortgage is the best. He is always there to answer your questions, and can easily explain the whole idea of a Reverse Mortgage. He takes the time and goes through the entire process with you. It worked out so well for me. Thank You Bruce!

We had researched Reverse Mortgages for 5 years and after hearing about Bruce Simmons and meeting with him, we finally decided to move forward with the Reverse Morgage. It has been over a year now and we are still very pleased with our decision. We think Bruce is very professional, knowledgeable and honest. Thank you, Bruce, for all your help.

I first met Bruce Simmons 2017. I found him on the internet. I was looking for someone local. I called him and explained I was only looking into doing a reverse mortgage, so I did not want him to think this was something I was ready to do. Bruce was friendly, very open about the basics of a reverse mortgage. Bruce came to my home and presented the figures and other details that he could offer. The first thing that impressed me was this was not a hard sell, more of a informational meeting. He was very open about all of the details, and answered my questions without hesitation. What really was evident was he was establishing a relationship with me, and I realized he knew I would not take the loan at that time. There was not enough equity in my home, and I would have to bring money to the table. Although I was not ready to do a loan, Bruce assured me he is always available for questions. Four years later, I finally did do a reverse mortgage, and I couldn't be happier with having done it. I have done away with a mortgage payment which allows me to fund my retirement account with that mortgage payment. We did some much needed landscaping with our cash out transaction, and will move on to improvements inside of the house. My reverse mortgage has a line of credit, and I feel sense security knowing it is there if I need it. Bruce explained that a reverse mortgage is not for everyone, but I feel certain that he paved the way for a strategy that worked for me. I will definitely do a refinance when the time is right. I will check in with Bruce to be sure what the benefits are when I do it again.

I have worked with Bruce Simmons for 15 years. Bruce is one of the best in the industry. He is extremely knowledgeable, kinds and detailed in what he does. His clients love working with him and trust him to help them with their Reverse Mortgage loans. I would recommend Bruce to anyone I know that is thinking about or wanting to do a Reverse Mortgage. He will always take very good care of the customers and make sure their needs are met! Class act and one of the best in the industry by far!