Seniors (+62) Reverse Mortgages Home Buying
Many people do not know, but seniors can buy a home using reverse mortgages. The process of buying a home using the reverse mortgage method for seniors is an affordable solution for millions of seniors throughout the US.
The qualification process is not to complected, but you would want a mortgage broker by your side during the decision making. there are always small print to notice, and a wider financial aspects that need a professional opinion. See the Washington Post guest writer who sheds some light on the reverse mortgage home buying for seniors:
“You should consider the FHA Home Equity Conversion Mortgage, which is the only federally insured reverse mortgage available.
To qualify, you must be at least 62; if you are buying with a spouse, both of you must meet the age requirement. The house you buy must be your principal residence and you must certify that you will live in the house within 60 days of obtaining the loan. Although single-family residences and properties with two to four units are eligible, cooperative housing is not. And if you are considering buying a condominium unit, make sure that the entire condominium association is FHA-certified. (See my column from Oct. 22.)
You (and your spouse, if applicable) will be required to meet with an approved credit counselor because there are significant legal and financial implications to such a mortgage. If you plan to leave your house to your children, for example, a reverse mortgage may leave little or no equity should you live a long time. Additionally, there are costs involved in such a transaction, although in many instances, they can be included in the amount of the loan. A counseling certificate must be submitted to the lender before closing.” Read More..
FHA Home Equity Conversion Mortgage
Like every financial decision reverse mortgage has both sides, a benefit and some pitfalls, not every buying a house using reverse mortgage would be the best option for seniors.
“Is a reverse more favorable than a regular mortgage? Yes, for two reasons: First, I will still have almost $200,000 left from the earlier sales proceeds. But more important, I will not have to make any mortgage payments. The bulk of a regular mortgage payment is the portion that goes to interest. For example, if I were to get a 30-year fixed loan for $200,000 at 4.25 per cent, my monthly payment would be $975 — money I am saving with the new reverse loan.
When does the loan come due? When you move out or die. At that time, you or your estate will either have to pay off the then outstanding mortgage — which will be much higher than the original loan, since interest will be added yearly — or sell the property. But one thing is clear: Neither you nor your heirs will ever have to pay more than the value of the house; that’s what FHA guarantees, since it has to pay any excess.” Read More..
In order to meet the credit requirements of reverse mortgage home buying for seniors, you may want to get a DIY clean credit guide,
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