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.

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