Are you aware that you can buy a home in Oregon, using the FHA Reverse Mortgage Program (HECM) if you are over 65 years of age? These Reverse Mortgage loans were authorized by the Housing and Economic Recovery Act of 2008 (HERA). HERA  defines “HECM for Purchase” as a real estate purchase where title to the property is transferred to the HECM (Reverse Mortgage) mortgagor, which the mortgagor will occupy as a principal residence, and, at the time of closing, the HECM (Reverse Mortgage) first and second liens will be the only liens against the property.

Buyers must also occupy the property in the first 60 days and the FHA case number cannot be assigned prior to Jan. 1. The Reverse Mortgage is only available on completed homes, so construction loans are not available, however, you can use the program to pay off a land sales contract. The property must be held in fee simple or on a leasehold of not lest than 99 years. The exception to this (which I find humorous) is that the leasehold can be a shorter term if it is an existing lease that will last for at least 50 years after the youngest buyers 100^th birthday.

No co-ops, boarding houses, bed and breakfasts, manufactured homes prior to June 15, 1976 or after that date that don’t meet HUD standards. Property flipping is also prohibited and may required more documentation.

As per normal with Reverse Mortgages, the loan to value is fairly low. There are examples, but every borrower is different so it is best to get estimated quotes for the individual. Calculations will be based on the age of the youngest applicant. No bridge loans are acceptable for this program. Funds for closing must be verified and come from allowable FHA funding sources.

OK, so how do you use a HECM for purchase loan? Let’s look at an example. In this example, assume that you are 68 years old and are selling a home that is too big for you that you own outright. The sale price is $350,000 and you want to buy a home that is $200,000. Now, you could pay cash for the home and invest the remaining $150,000 in a safe product that would pay you a monthly income. Or, you could put $100,000 down and finance the remainder with a HECM and invest $250,000 in a monthly income account.

The great thing about this option is that the money is available now and there are no monthly payments required. HECM purchase – something to think about. Seniors have the ability to buy a home with no monthly payments. Additionally, there are no income or credit requirements from the loan. Give me a call and let’s discuss this possibility before you pay all of your cash out. You can reach me at 541-342-7576 or e-mail at fchamberlin@alpinemc.com.

2 Responses to “Seniors – Consider a Reverse Mortgage for purchase”