A Home Equity Conversion Mortgage (HECM) for purchase is when a new home is purchased using the loan proceeds from a reverse mortgage.
Taking the proceeds from the sale of a home and purchasing a new home may be beneficial for an elderly person that wants to move closer to their loved ones or if they want to downsize their primary residence.
Qualifications
In order for a homeowner to take advantage of this program the owner must be at least 62 years old and the current home must be their primary residence. The new home purchased must be occupied within 60 days and their must be no other mortgage used for the purchase of the new home except the original property. The difference in cost between the original property and the new property must be paid for in cash or from the sale of the previous home. The other proof that must be obtained before making any agreement is the proof that the mortgager lived in the home prior to the agreement.
Benefits
The benefits of an HECM for purchase is that an elderly couple can incur less expenses, move into a smaller home with less up keep and possibly move closer to their children or long time friends. The program is great for relocating and purchasing a new home. The program allows the simultaneous process of purchasing a new home and acquiring a reversible mortgage. With an HECM for purchase program the owner is usually eligible for a fixed interest rate.
Conclusion
An HECM for purchase program is a seller financing program. The homeowner is selling their current property to purchase a different property. The sale from the original property is what is used to make the purchase through a reversible mortgage. Being able to purchase a new home is beneficial to an elderly homeowner and serves them better in the long run.
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