If you are a senior citizen who is interested in buying a new property, you may be able to convert the equity from your current home to help you finance a new home with no additional mortgage fees. A reverse mortgage for purchase is one type of financing option that allows a borrower meeting specific criteria the opportunity to move into a new home by obtaining a reverse mortgage. If you are nearing retirement age in Knoxville, Maryville, Lenoir City, Oak Ridge, or Gatlinburg, Tennessee, and interested in buying a new home, Foundation Mortgage can help. Read on to learn more about using a reverse mortgage for the purchase of a loan.
How Does a Reverse Mortgage for Purchase Work?
A reverse mortgage for purchase, (also sometimes referred to as an HECM for purchase), is a loan that is funded completely by a private lender, but is regulated by the federal government. This type of mortgage allows borrowers who are 62 years or older to purchase a new home by using the loan revenue from a reverse mortgage. A reverse mortgage for purchase is different from an reverse mortgage in that in a reverse mortgage, a borrower receives monthly cash payments in exchange for the equity from their home.
In a reverse mortgage for purchase, however, a borrower uses the funds received from the reverse mortgage towards the purchase of a new home, and the borrower enters into a new mortgage contract. The borrower can then live in the home without making monthly mortgage payments because the payments on the new mortgage are deferred. A homeowner can then live in the home until they either relocate, the contract is terminated, or when the borrower passes away. In the event that a borrower passes away, the family has the option of keeping the property, paying off the loan, or selling the home. It is important to note that even if the property is sold at a lower price than the remainder of the mortgage, the borrower’s heirs will not be responsible for paying the difference, the debt will be considered settled.
Qualifying for a Reverse Mortgage for Purchase
Certain eligibility requirements must be met in order to qualify for a reverse mortgage for purchase, including:
- A borrower needs to be at least 62 years old
- A borrower must live in the home as their primary residence
- A borrower must be able to afford additional living expenses, such as homeowners insurance, property taxes, etc.
- A down payment and closing cost payments will be required
Get Assistance Applying for a Reverse Mortgage for Purchase
If you are an older homeowner interested in buying a new home in Knoxville, Maryville, Lenoir City, Oak Ridge, or Gatlinburg, Tennessee, and are interested in applying for a reverse mortgage for purchase, Foundation Mortgage can help. Contact us today for a consultation.