What Is A HECM 4 Purchase… And Why Should I Use It To Buy My Next Home?

First, a Home Equity Conversion Mortgage is an FHA insured, HUD regulated reverse mortgage.  In fact, a HECM is the only reverse mortgage overseen and heavily monitored by the government specifically to protect senior’s home ownership interests.

But, an HECM 4 Purchase (H4P) is a very special reverse mortgage available to anyone 62 years of age or older, who may want to utilize it to:

• Preserve cash from a previous home sale or a balanced retirement portfolio
• Enhance retirement income by eliminating monthly mortgage payments
• Increase purchasing power for the next home of their dreams
• Right size to a smaller home closer to family and friends

How do you apply and what is required for an H4P loan?  In many ways, it is little different from purchasing a home using a traditional forward mortgage. You still need to work with a real estate agent as well as a qualified mortgage professional who specializes in reverse mortgages.  Additionally, closing costs and the loan process are also very similar.

However, there are certain items that are different from a typical mortgage, which are requirements of any HECM loan, such as:

• The youngest borrower on title must be 62 or over (note, a spouse under 62 years of age is considered a non-borrowing spouse)
• You are purchasing a single-family home, an FHA approved manufactured home or condo, or an owner occupied 2 to 4-unit multifamily home
• You will occupy the home as your primary residence within 60 days of closing
• You will pay for the balance of the home purchase price (the amount not covered by the HECM loan) in cash from sales proceeds of a previous home, or other assets on hand (savings, investments, gifts from family members or up to 6% seller concessions, etc.)
• You need HUD approved financial counseling, by phone or in person, typically 60-90 minutes in duration.
• And, you need to pass a financial assessment review as required by HUD to make sure you can pay taxes, insurance and ongoing repairs of your home.

Generally speaking, an H4P is right for you if you want to:

• Avoid a required monthly mortgage payment during retirement, though not prohibited from doing so
• Only put down 60% (or so depending on age) in equity while retaining the balance of your available cash
• Delay receiving your social security benefits by eliminating the need to pay a monthly mortgage
• Purchase a nicer home in a nicer neighborhood or even by the golf course of your dreams than your all-cash offer could otherwise afford

The reasons for using a reverse mortgage to buy your next home are endless.  Or, it may be as simple as the desire to improve monthly cashflow while preserving asset liquidity in the face of long-term housing uncertainty and a coming recession.

But, there are certain steps that HUD requires in a certain order to close a HECM 4 Purchase.  If you find the idea of an H4P intriguing and would like more information about how you can use a reverse mortgage to purchase your next home, call, text or email Richard McWhorter of Ridge Reverse to find out more!

Maybe you, or someone you know, would like the benefits of the new HUD/FHA Home Equity Conversion Mortgage is too good to be true?  As with any loan product, there is always additional information to discuss. Give Richard McWhorter of Ridge Reverse a call, text (863-456-27810) or email (richard.mcwhorter@amerifund.com) and find out what you thought you new about reverse mortgages is keeping you from one of the best and safest long term financial products on the market today.

Next step?

Simply reach out to us at Ridge Reverse and let’s discuss how we can help you with a product designed specifically to meet your needs for a lifetime of happiness… while enhancing long term cashflow and quality of life. Feel free to call, text (863-456-7810), or email richard.mcwhorter@amerifund.com and find out more.

Ridge Reverse, powered by Amerifund, provides an Equal Housing Opportunity. Information is subject to change without notice. This is not an offer for extension of credit or a commitment to secure a loan. Some restrictions may apply. This material is not from HUD or FHA and has not been approved by HUD or any government agency.

Richard W. McWhorter, NMLS 1618644, is an independent reverse mortgage specialist and can assist in your reverse mortgage needs in most all states. Follow him on LinkedIn, the Ridge Reverse website or contact him directly at richard.mcwhorter@amerifund.com.