call us now at:

Blogs

How seniors can be use a reverse mortgage loan to buy a new home

Many seniors in America start feeling trapped as the age. They love their existing home but it is either no longer suitable for them for mobility reasons, or they feel increasingly isolated from friends and family. The good news, however, is that with a reverse mortgage loan, seniors over the age of 62 can relatively easily secure financing on a new property, even if they do not want to sell their existing home.

The Quick & Simple 2017 Reverse Mortgage Guide

Many seniors are already familiar with the benefits of a reverse mortgage when it comes to accessing the equity in their existing property. With balances never coming due until properties are sold or the holder of a reverse mortgage loan passes away, reverse mortgage loans are widely used already by seniors looking to live as prosperously as possible in their retirement.

There is only one problem. In the past, if a senior person wanted to purchase a new property, they would usually have to use all the equity in their existing property in an all-cash transaction. Alternatively, a senior would have to use a significant portion of their fixed retirement income to pay new monthly mortgage balances. This is why in 2009, the Home Equity Conversion Mortgage (HECM) was introduced.

How a Reverse Mortgage Loan Works

With a reverse mortgage HECM, a senior person can borrow up to 52% of a new home’s purchase price if they are at least 62 years of age, have no delinquent federal debt, will use a purchased property as their primary residence, and can pay all property taxes, HOA fees and other costs independently.

The key difference between a regular mortgage and a HECM loan, however, lies with the fact that after qualifying, seniors will not be liable for any monthly mortgage or interest payments. Instead, amounts borrowed will be paid in full on the advent of a person’s death or the sale of their property.

Benefits of a Reverse Mortgage

While some seniors might feel daunted at the prospect of having to repay loan amounts in full on the advent of their death, one of the key benefits of a reverse mortgage lies with the fact that if a loan balance is greater than the amount of equity in a property, there is no liability for heirs to pay the outstanding balance. Instead, lenders themselves are insured against such losses. For many seniors, this makes reverse mortgages ideal for increasing their purchasing power, whilst simultaneously enjoying their retirement to the fullest extent possible

Could a Reverse Mortgage be Right for You?

The key thing to keep in mind when considering using a reverse mortgage to purchase a property is that every payment and all interest accrued over the duration of a loan, can eat significantly into the equity of properties which loans are secured against. This being the case, little might be left after a loan is paid in the way of inheritance for surviving heirs. At the same time, all seniors should make sure that they won’t need money borrowed against the equity in their home for other purposes such as future medical bills.

Other Blogs

The top benefits of active lifestyle senior living communities

According to 2013 Mercola article, retiring from working life can result in a staggering 40% increase in incidents of depression, social isolation, and low self- esteem among retirees. Of course, that’s hardly something which you want to hear if you are nearing retirement age. The good news, however, is that depression and social isolation definitely doesn’t have to play a part in your personal retirement if you don’t want it to.

Selling real estate for the best price possible

A fast home sale is essential when it comes to getting the best price possible for your property. There is only one problem. Getting a house ready to sell and securing a top dollar sale isn’t as easy as just setting the right asking price or staging a property as effectively as possible. In some cases, after all, your property could be competing against literally hundreds of others in the same neighborhood.