What Is The HECM For Purchase Program?
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!
Important Information to Understand
- At the conclusion of a reverse mortgage, the borrower must repay the loan and may have to sell the home or repay the loan from other proceeds.
- Charges will be assessed with the loan, including an origination fee, closing costs, mortgage insurance premiums and servicing fees.
- The loan balance grows over time and interest is charged on the outstanding balance.
- The borrower remains responsible for property taxes, hazard insurance and home maintenance, and failure to pay these amounts may result in the loss of the home.
- Interest on a reverse mortgage is not tax-deductible until the borrower makes partial or full repayment.