The Home Equity Conversion Mortgage (HECM) for Purchase is a reverse mortgage that allows seniors, age 62 or older, to purchase a new principal residence using loan proceeds from the reverse mortgage.
In 2009, the HECM for Purchase program began as a way to use a reverse mortgage to purchase a new home. At the time, many people were using a costlier and more complicated two-step process to purchase a new home. It was common for homeowners to obtain a traditional mortgage to purchase the home and then use a reverse mortgage to pay off the first one. Seeing this, the government sought to simplify the process and costs.
Reverse mortgages have been gaining acceptance with many Gresham homeowners. And for Gresham retirees looking to buy another home, the HECM for Purchase program can be a useful tool. The HECM for Purchase program allows fewer distribution needs from the investment portfolio because a greater portion of the home’s cost can be financed by the reverse mortgage, which does not require payments until the loan balance becomes due.
Gresham Retirees Can Use This Program To Downsize Or Upsize A Retirement Home
Another group who may find the HECM for Purchase program useful is Gresham retirees. When downsizing, Gresham retirees will find this program useful because it could free up more assets from the sale of the previous home to be used for other purposes. On the other hand, when upsizing, the HECM for Purchase could allow for a more expensive home. This is a great opportunity for Gresham retirees who may be concerned about obtaining a traditional mortgage, as it may become increasingly difficult to do so after retirement.
What Happens If The Loan Balance Exceeds Home Value?
It sometimes happens that a borrower may live in the home long enough that the loan balance may grow to exceed the value of the home. However, this too can be useful to Gresham homeowners. Gresham homeowners could use the HECM for Purchase program as a way to provide housing services as long as they remain eligible for a total cost equal to the portion of the home value and up-front costs not covered by the HECM. On the other hand, for Gresham borrowers who leave the home while the loan balance is still less than the home value, the home could be sold with any remaining equity still available to the borrower after the loan is repaid.
Gresham Homeowners Can Lower Monthly Costs With The HECM For Purchase Program
When Gresham homeowners don’t have to make a monthly mortgage payment with the aid of this program, it reduces the household’s fixed costs. This provides potential relief of any need to spend down investments to Gresham homeowners. The HECM for Purchase option can be analyzed relative to paying outright for the home with other assets or opening a fifteen-year mortgage if still feasible.
Gresham homeowners who find themselves curious about this program can contact Stonebridge Mortgage Group. We are happy to answer any questions and help Gresham homeowners figure out if the HECM for Purchase program is right for them.
Stonebridge Mortgage Group Offers Guidance On All Mortgage Matters
For professional assistance with mortgages and related services, look no further than Stonebridge Mortgage Group. You can rely on Stonebridge Mortgage Group to help guide you through the entire home buying process. We can help get you pre-approved for a mortgage and assist with real estate loans and other mortgage solutions—both residential and commercial. Stonebridge Mortgage Group serves the greater Portland area and is located in Gresham, Oregon. Don’t wait to get quality assistance with your home buying needs!
Though reverse mortgages were once considered highly controversial, financial planners are beginning to see reversing your mortgage as a legitimate option for those who struggle with retirement savings. More and more people are finding it difficult to save up for a retirement fund. However, home equity “conversion” loans can aid those who have struggled to save by augmenting their retirement income. Part of the widely growing acceptance of reverse mortgages is due to the Federal Housing Administration tightening lending standards. Reverse mortgages are now a good tool for retirees.
What gave reverse mortgages such a bad reputation?
Put simply, overly aggressive brokers took advantage of the reverse mortgage system. These brokers gave loans to senior citizens who lacked financial savvy and profited from them in the form of large commissions. The system of reverse mortgages wasn’t polished enough, and during the Great Recession as many as 10% of all reverse mortgages fell into default.
Growing acceptance and higher standards
The FHA tightening the standards for those looking to reverse a mortgage helped to rectify a system that had previously made it easy to take advantage of clients. The newer standards make it harder for clients to make themselves vulnerable to financial disaster. For example, now the amount of equity a homeowner can take out in the first year is limited to 60%, removing the obvious temptation of taking out 100%. Taking out too much too soon can easily lead to the client being overwhelmed and causing their loan to go into default.
Credit standards were raised as well. Homeowners who don’t have robust finances or who have struggled with making payments in the past may now be expected to put money aside in an escrow account to cover future expenses. Additionally, to qualify for a reverse mortgage you must be at least 62. You must not only have substantial equity in your home, but also be able to keep up with taxes, insurance payments, and home repairs.
Balancing your funds while in retirement
If you decide to take out a reverse mortgage, it is recommended that you have another source of money to draw upon. For example, being able to draw funds from cash, home equity, and investments, can make your finances more stable. Having the choice to tap into different funds, depending on how the market is doing, can be extremely useful. When the markets are up, you can tap into your investments. When they’re down, you can shift to real estate.
Talk to the professionals at Stonebridge Mortgage Group about the possibility of reversing your mortgage.
For professional assistance and advice on reverse mortgages, look no further than Stonebridge Mortgage Group. You can rely on Stonebridge Mortgage Group to help guide you through the home buying process. If you’re ready to apply for a loan and want to go through the process online, Stonebridge Mortgage Group offers online applications. We can help you get pre-approved for a mortgage, walk you through the real estate loan process, and assist you with mortgage solutions, both residential and commercial. Stonebridge Mortgage Group serves the greater Portland area and are located in Gresham, Oregon.
When you think of loans and integrity, Stonebridge Mortgage should be the first name that comes to mind. We understand how important it is to match a person with a loan that meets their needs and abilities. It’s why we take the time to match our lenders and consumers. Your Stonebridge Mortgage Group Loan Officer is here to help you with everything you need to find the right loan for you.
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David is so professional and accommodating. I appreciate his level of professionalism and willingness to help.
We have chosen Stonebridge a couple times now, and they are always a pleasure to do business with.
David with Stonebridge has helped me on multiple occasions, between financing a new home as well as a couple of refi's over the years. I cannot stress how communicative he is when it comes to keeping his clients in the loop. Even when there was a slight lull during my most recent refi I would receive an email just letting me know that nothing new had transpired yet so I never had to question what was going on.
I have worked in the Real Estate field for almost three decades and David is by far the most responsive and professional mortgage Broker that I have dealt with.
If you need help purchasing a new property or help with a refi you can't go wrong by hiring Stonebridge!
Refinancing our home through Stonebridge Mortgage was a great experience. They locked in a great rate, laid out each step along the way, and provided regular updates throughout the process. It couldn't have gone more smoothly and now we are saving $300/mo! Thank you Stonebridge Mortgage!
David is very easy to work with and makes the entire process very simple. I have used Stonebridge for initial purchase and refinance and it only gets better. Get the straight answer quickly from Stonebridge
I've had nothing short of an amazing experience working with Stonebridge. I bought my first home over 2 years ago and without their help I may still be living in an RV. I intended to refinance my home later this year and I will most definitely be working with Stonebridge. I highly recommend. PS, I was qualified at the time with a credit score of 640
David was wonderful to work with. He was highly recommended to me by my partner who had worked with David a few years ago.
The day I contacted David he immediately put everything in motion
to assist me in refinancing with a much better interest rate.
We were able to handle everything by email /phone and Fax. He
responded quickly to questions I had. And let me know immediately
if something needed to be done or changed.
I would definitely work with David in the future if the need arises. The process went smoother than any other time I have worked with mortgage
David was an absolute pleasure to work with! He was consistently responsive, on top of every detail and always so upbeat and funny! (An added perk that I truly appreciated during the stressful process of selling AND buying at the same time!) I will be recommending him to everyone I know!
David was a good man to do business would
do business again