By Mike Bodeen · 2 July 2018
NO MORTGAGE PAYMENT WITH 50% DOWN?
If you are 62 or Older, or know someone who is, you need to read this!
Are you saying if I’m 62 or over, I can buy a $500,000 home (or more) with a 40% to 50% down payment, retain ownership of the home, and never have a mortgage payment again — ever?
Yes, that’s correct.
With 4 decades under my real estate belt, it’s not often that something “new” comes across my desk that allows me to honestly say this can truly make a positive change in someone’s financial (and perhaps personal) life with virtually no risk!
The financial product that I’m speaking of is known as the HECM (Homeowner Equity Conversion Mortgage) For Purchase Mortgage. Though the loan has been around for 9 years, it was substantially amended 4 years ago which resulted in the amazing product it now is.
I first took notice of HECM when my friend and client, who happens to be a nationaly syndicated financial columnist, used this tool to purchase his own $600,000 home in Chandler. And he could have paid all cash if he wanted to!
Some upfront disclaimers in case you think you know about this loan. First of all, let’s deal with the nasty “R” word, as in “Reverse” Mortgage. Yes, it is a Reverse Mortgage, but the “R” better stands for “Revolutionary.”
This loan is designed for those aged 62 or older, to purchase (or refi) their home which will enable them to buy the home with 40% to 50% cash down payment and NEVER make a mortgage payment again. Ever. Well, at least as long as they or their spouse are still alive. In Steve’s case, Steve had $300,000 equity from his Scottsdale residence closing which he and his wife put down on the Chandler home.
By the way, I do not have any affiliation with this loan product, other than having just obtained HECM Certification to be able to help buyers buy homes with this loan product. And, importantly, I do have HECM specific lenders who will assist my friends and clients through the process.
This blog is not intended to give an exhaustive treatise about the HECM product. I do however have brochures and information to help our clients more fully understand HECM for Purchase.
Here are a few facts about the program.
-If you qualify, you can buy a single family home or FHA approved condo as your principal residence by taking out a HECM reverse mortgage on that property.
-Using proceeds from the sale of your current home or cash on hand, you make a down payment (usually 40% to 50% of the cost of the new home) and cover closing costs.
-The balance of the purchase is covered by your HECM proceeds—any remaining funds can be used as you choose.
-There’s just a single closing, as the home purchase and HECM reverse mortgage are executed in one transaction.
-You make no monthly mortgage payments on the new home. Only taxes, insurance and HOA, if any.
-You—not the bank—own the home, and you can continue to live in it as long as the terms of the loan are met.
-The loan is repaid—including principal plus accrued fees and interest—when the last surviving homeowner passes away or the property sells.
-If you’re ever upside down when you sell, FHA’S insurance covers the shortfall. Not you!
Can you see how HECM could be an amazing financial tool for some people that even savvy financial experts like Steve can utilize for financial gain?
Contact us at Info@BodeenTeam.com.