How can you buy a home and have no mortgage payment even though you still have a home to sell? If this is you
You are 62 or above You have significant equity in your primary residence You dont feel comfortable buying a new home until your current home is sold You know where you would like to buy and realize this is a good time to buy You plan to pay cash and do not want a mortgage when you do retire
then, read on. There are ways to take advantage of this market without taking a hit on your current home.
When I say Reverse Mortgage some people will automatically stop reading and thats fine. In this market, it is just another financing vehicle and for leading edge Boomers and older, it could be the perfect answer. A Reverse Mortgage is not credit score driven, there are no income requirements, no employment verifications, and no assets required (other than the cash if a purchase). Heres a few examples of how you might benefit:
Scenario One: If you have no mortgage balance on your current home or have significant equity, you can apply for a Reverse Mortgage on that home and use the proceeds to pay cash for your new home. I know, you dont want a mortgage. With a Reverse Mortgage, however, there is no monthly payment. In fact, there is no payment due until you do sell the home.
Why not just get a Home Equity loan? In some cases, this is a smart option with low interest rates. Closing costs are low and the interest paid is deductible. But you will have a monthly payment and it will increase as the market improves and interest rates inevitably rise.
Reverse Mortgages are front loaded and the perception is that they are pricey. If it allows you to buy in a buyers market and sell later when prices have recovered, how much of a difference could that make? What would your house sell for in one year or two? Do you live in a historically strong market where house prices could rebound by 10%, 20% or more?
Scenario Two: You can also buy a home with a Reverse Mortgage. Depending on your age, you may need to have a 30% to 50% down payment, but you can then apply for a Reverse Mortgage instead of a standard mortgage. You pay the closing costs and live in this home for the rest of your life with no mortgage payment. Even if you live another 30, 40 or 50 years, you will never make a mortgage payment on this home. What about your estate? Any remaining equity in your home will go to your estate when it is sold.
Its an option worth considering as you plan for your future. As a Seniors Real Estate Specialist, I can refer you to a specialist who will be able to explain your options much more clearly than I can. The truth is there are so many ways to take advantage of this market. Ready, willing and able buyers are getting some tremendous deals. Dont wait until they are gone and the Sellers are back in charge.
Let me rephrase that Buy now and wait to sell until the Sellers are back in charge. A Reverse Mortgage just might be the key to your financial future.
For more information - Visit the US Department of Housing and Urban Development (HUD) and read their excellent summary of the FHA Reverse Mortgage Program HECM
Every case is unique! Ask us for a referral to a local mortgage professional who can sit down with you and explain the programs and help you choose the right one