If you are at least 62 years of age and are looking to downsize or right size your home into something more manageable or in a different location closer to family, then FirstBank can help. Maybe you are looking for a home that is more cost effective? If so then FirstBank, a reverse mortgage lender in Memphis recommends discussing a Reverse Mortgage for Purchase. Traditionally, if a borrower lives in their home, a HECM reverse mortgage allows you to borrow against the equity in your home without having to make monthly mortgage payments as long as you are living in the property. However, a reverse mortgage can also be used to buy a new home.
Recent trends have been changing with the rise in baby boomers retiring, Chris Brundige of FirstBank Reverse Mortgage says that he has seen an increase in the Reverse Mortgage for Purchase.
How Does a HECM for Purchase Work?
Basically, when you buy a home using FirstBank’s Reverse Mortgage for Purchase program, you can obtain a new home by making one large down payment and combine it with a reverse mortgage to make up the difference in the purchase price. Typically, a borrower will make a down payment of 50% or less of the purchase price of the property, and by utilizing the reverse mortgage to purchase the house will have no monthly mortgage payments to make on the loan in the future. They are required to pay taxes, insurance(s) any HOA dues and up keep of the property, but they will have no monthly mortgage payments for as long as they live in the property. This allows you to get into the property that you want for half the money and still have no ongoing monthly payment to make.
Example: Bobby Jones owns his house free and clear and it is worth $300,000. He lives in the house by himself and the property is too big for his needs. He has to rake too many bags of leaves each year, the property is getting more and more difficult for him to maintain as he gets older, and his kids live in a different city. He wants to relocate closer to his kids into a home that is more manageable for him, with a lot less maintenance.
He wants to buy a $200,000 house that is closer to his kids. Like most retirees, he is trying to limit his out of pocket expenses and does not want to have a mortgage payment on his new house. He thinks the only way to accomplish this goal is by paying cash for his new house. (Let’s evaluate this scenario being used. Selling a 300k home with no mortgage, and certainly buy a 200k home with no payment. It needs more of an explanation as to why he wants to retain his cash.)
Bobby Jones is referred to Chris Brundige with FirstBank. After talking about FirstBank’s Reverse Mortgage for Purchase program he finds out that instead of paying cash for the new house, there is another way and for him a better way. He can buy the new house he wants without having a mortgage payment and spending his savings by paying cash for it. Basically, he can make one large down payment on the house and the Reverse mortgage will make up the difference in the purchase price getting him his new house with no mortgage payment for the rest of his life for half the money he was planning on spending(???). By using FirstBank’s Reverse Mortgage for Purchase loan, this will allow him to get the house that is more suited for his needs and is closer to his kids and would allow him to add more to his retirement savings, helping him live a more comfortable life financially with more income coming from his investments and no mortgage payments.
Here is the Math:
- Pay cash for new house:
300,000 (sale of current home)
-200,000 (cost of paying cash for new home so you don’t have monthly payments)
=100,000 left over to add to nest egg
- Use FirstBank’s Reverse for Purchase program
300,000 (sale of current home)
-100,000 (cost of downpayment, Reverse mortgage makes up the rest)
=200,000 left over to add to nest egg
Bobby Jones determines that it is in his best interest to utilize the Reverse Mortgage for Purchase program and he is extremely thankful to his Realtor for referring him to Chris Brundige with FirstBank Reverse Mortgage. He is completely amazed that he can get the house he wants for half of the money and add more to his retirement savings. This has eased any fears he had about running out of money during his retirement.
The Reverse for Purchase loan is not due back until the last borrower dies, sells the home, or no longer permanently occupies the home. There is also mortgage insurance which is part of the closing costs of the loan, that guarantees that the borrower nor their heirs can ever owe more than the home is worth, should the house decrease in value or the loan balance exceeds the value of the home.
FirstBank Reverse Mortgages are a federally-insured, home equity conversion mortgage (HECM). These mortgages are governed by the U.S. Department of Housing and Urban Development and are the only reverse mortgages insured by the Federal Housing Administration.
What can a Reverse Mortgage for Purchase be used for?
- Single-family homes.
- Townhomes and duplexes (2- to 4-unit homes with 1 unit occupied by the borrower)
- FHA-approved condominiums
- FHA-approved manufactured homes.
- New construction homes require a certificate of occupancy
FirstBank requires all borrowers to attend Reverse Mortgage counseling prior to acquiring a HECM. If you are interested in the program and would like to learn more about how FirstBank’s Reverse Mortgage could help extend the life of your retirement plan and put your largest asset to work for you, Chris Brundige, a licensed Reverse Mortgage lender in Memphis, would be glad to help you. Please call Chris Brundige at 901-472-1301 to learn more about your options or visit http://reversemortgagelenderintn.com for more information.
*Homeowner is still responsible for paying property taxes, insurance, and property maintenance.