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As you progress in your life, you start to look forward to the sunny, relaxing days of retirement....
If you’re thinking about retirement, you need to know about the reverse mortgage for purchase! With this real estate trick, you can retire and buy the home you’ve been waiting for. Here’s what you need to know about reverse mortgages for purchase and how you can use one to get into the home of your dreams.
First off, a reverse mortgage is a type of loan available to people over the age of 62. It’s a way to access the equity stored in your home to pay for something else. Basically, a lender will give you a loan on the equity stored up in your home. Rather than paying for the loan through monthly payments, the loan is repaid when the property is sold or after the passing of the borrower.
However, a reverse mortgage assumes that you will continue to live in the home that you reverse the mortgage on. If you want to move to a new location or downsize, a reverse mortgage won’t be of much help to you on its own.
That’s where the reverse mortgage for purchase comes in. This kind of loan allows you to get all the benefits of a reverse mortgage while also purchasing a new home–all in one transaction.
The major upside to a reverse mortgage for purchase is that you don’t have to pay monthly mortgage payments like you would with a typical mortgage. The reverse mortgage takes care of those payments until the loan is due. Plus, you get all the protections that come with a typical reverse mortgage, such as the non-recourse feature. This is a super important feature that ensures that you won’t have to repay more than the home is worth at the time of sale when the loan is due.
Due to the regulations for a reverse mortgage for purchase, you’ll need a sizable down payment in the range of 45-70% of the new home’s purchase price. The down payment amount is based on the price of the new home, the age of the youngest borrower on the reverse mortgage, and current interest rates. Your new home will also need to be your primary residence, and the youngest borrower on the loan needs to be 62 or older.
If you’re interested in a reverse mortgage for purchase, you should consult with a trusted advisor to see how it stacks up against your other options. I’m happy to provide you with more information on options to consider if you’re ready to retire and buy your dream home. I'm ready when you are.
