No mandatory monthly payments. A great way to improve your retirement. Receive cash for any reason. Line of credit that grows annually. Retain ownership of your home. Loan proceeds are tax free. Insurance premiums for long term care.

HECM for Purchase

What are the purchase guidelines for HECM loans? If you are senior, find out if you are eligible.

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David Blatt

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Reverse Mortgage Purchase

HECM For Purchase

David Blatt is here to guide you! HECM loans can be a powerful tool for retirees looking to purchase a new home. Whether you have questions about eligibility, financing options, or the process itself, David has the answers you need to navigate this exciting chapter in your retirement journey. Explore the details below or call today for a personalized consultation!

A reverse mortgage to purchase a property? How does it work?

Ready to write a new chapter in your retirement story? A HECM for Purchase loan can be the key to unlocking your dream home in Traverse City. This unique program, established by the Housing and Economic Recovery Act of 2008, allows qualified seniors aged 62 and older to finance the purchase of a new residence using proceeds from a reverse mortgage.

The beauty of a HECM for Purchase loan lies in its efficiency. By combining the home purchase and reverse mortgage into a single transaction, you’ll save on closing costs compared to financing them separately. This program officially launched on January 1, 2009, and it adheres to all the standard HECM requirements, with some additional rules and regulations to consider.

Interested in learning more? Contact us today to explore if a HECM for Purchase loan can help you navigate your retirement.

What Are The Basics?

  • Can purchase existing 1 to 4-unit property
  • Property must serve as the principal residence
  • Once the HECM purchase is complete, no additional liens are permitted (Lender in 1st position, HUD in silent 2nd)
  • Must provide monetary investment at closing from an allowable funding source, see below for details
  • Must occupy property within 60 days of closing
  • Newly constructed properties must have a certificate of occupancy issued by the time the Home Equity Conversion Mortgage purchase loan is insured by FHA (‘endorsed’).

There are some differences between a HECM for Purchase and a Traditional HECM. The major differences concern the property types that are eligible, the cash required at closing, the involvement of a Real Estate Agent in the loan process, the recommendation of a professional home inspection, and certain closing costs.

There are guidelines regarding which properties are eligible for a Reverse Mortgage.

HECM for Purchase Guidelines 

Eligible Properties

For those seeking the security of federal backing, there’s another way to describe reverse mortgages: Home Equity Conversion Mortgage (HECM) loans. HECM loans are essentially federally-insured reverse mortgages, offering the same features and benefits as traditional reverse mortgages, but with the added peace of mind that comes with government protection.

Ineligible Properties

  • Cooperative units
  • Manufactured homes (in certain circumstances they may be eligible)
  • Bed and breakfast properties, boarding houses

Selecting A Home For Purchase & Getting An Inspection

All seniors are strongly encouraged by HUD to get a home inspection from a licensed professional home inspector (This is suggested but not required)

  • Evaluates the physical condition: structure, construction, and mechanical systems
  • Identifies items that need to be repaired or replaced prior to the scheduled closing date
  • Estimates the remaining useful life of the major systems, equipment, structure, and finishes
  • Buyers should be at the inspection to ask questions about the condition and maintenance

Required Repairs

  • Health and safety or structural integrity issues
  • Must be completed prior to closing by the seller
  • Include in a purchase agreement
  • Buyer cannot put any money into repairs before they own the home

Writing An Offer

  • Must state offer contingent on a satisfactory inspection conducted by a qualified inspector
  • The borrower may want an attorney to review – increases costs but may be worth it
  • The client may cancel the transaction at any time prior to closing but this could affect earnest money deposit

Closing Costs

Standard HECM closing costs plus:

  • Recordation fees
  • Transfer taxes
  • Varies from state-to-state

Licensed to do business in the State of Michigan Arizona California Colorado Florida Tennessee

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Resources
and case studies

Gain valuable insights from my research and case studies on reverse mortgages and home loans.

01

A Home Equity Conversion for Purchase

A Home Equity Conversion for Purchase loan or H4P, is a safe, FHA federally insured loan program that helps seniors purchase a home more suited to their retirement lifestyle.

02

Who Qualifies for A Reverse Mortgage?

You're considering a reverse mortgage to assist with your retirement finances, but are you eligible? Find out how to qualify by watching this video.

03

Why Should Seniors Consider a Reverse Mortgage?

By arranging a reverse mortgage ahead of time, before any emergencies occur, you'll have extra cash available when needed.

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HECM for Purchase 

Are you a senior homeowner that feels your home no longer fits your needs? You don’t need the additional family space anymore, and maintaining a large home is expensive and can be a drain on your time and resources. It might be time to downsize and move into a one-story home or to a neighborhood closer to your family. The problem is that although your home has increased in value over the years, selling your current home may not cover the purchase price of a new one.

A reverse mortgage loan program designed specifically to help baby boomers aged 62 and older can help bridge that gap. A Home Equity Conversion for Purchase loan or H4P, is a safe, FHA federally insured loan program that helps seniors purchase a home more suited to their retirement lifestyle. It will allow you to make a one-time payment of 50 to 65% of the purchase price of a new home, while eliminating your monthly mortgage payments…for life. You will still be responsible for maintaining the home and paying any property taxes, home insurance, and HOA fees. But you don’t have to repay the loan until you sell your current home, or you no longer live there as a primary residence.

For many senior homeowners, this is a better option than paying cash for a new home or taking out a mortgage in retirement. H4P also effectively doubles your purchasing power, by allowing you to afford the home you want now while leaving enough cash left over to fund your retirement. To find out more about the H4P program, call us today.

David Blatt
Reverse Mortgages of Michigan
1-800-318-8000
davidjblatt@gmail.com

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