Absolutely. A reverse mortgage loan (both FHA insured and proprietary) can be used to purchase a new home.
So how does this work? Well, when you purchase a home with a reverse mortgage loan, you, the borrower, will contribute a percentage of the purchase price of the home. The remaining funds you need for the purchase will come from the reverse mortgage loan proceeds.
You may be wondering how much you will need to contribute. This varies because the amount you get is based on your age (or the age of the youngest borrower on the loan) and the interest rate. However, I've provided an example below to give you an idea of how it works and how age affects your contribution amount. The older borrowers will have to contribute less than the younger borrowers.
Since interest rates are also a factor in how much you receive, this chart should only be used as an example. If you want to find out figures for your specific situation, please give us a call.
Age of Youngest Borrower
Home Value: $400,000
Home Value: $500,000
Home Value: $600,000
Keep in mind that your obligations on a reverse mortgage for purchase loan are the same as those required for a refinance. These include:
1. The home must be your primary residence.
2. You must continue to pay the property taxes, fees and hazard insurance on the home.
3. You must keep up with the maintenance on the home.
If you fail to do these things, the loan will be called due and you will have to repay it. So, it is important to ensure that you can keep up with these items going forward.
If you have questions about qualifying for a reverse mortgage for purchase loan, please call us! We will be happy to go over everything with you. You can also order our free reverse mortgage loan guide to learn more.
*The above table is an example for illustration purposes only. The figures used are only estimates and are subject to change.
Laura Funderburk is a highly sought after reverse mortgage loan specialist in Dallas, Texas. She has focused on this specialty loan for many years and stays up-to-date on the latest trends and changes. She is known for helping retirees supplement their retirement income using a reverse mortgage loan without being pushy or overbearing.
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