Certified Reverse Mortgage Professionals, Chris Handy and Louis Baca discuss the benefits and options of using a Home Equity Conversion Mortgage (HECM) when considering downsizing or relocating into a homebuyer’s forever retirement home. See how refinancing or purchasing a home with an HECM allows senior homebuyers greater financial freedom. To learn more about reverse mortgage solutions, take a look at the video below and others like it here.
A Home Equity Conversion Mortgage Provides More Options
A HECM gives you the opportunity to choose what you do with your money. Typically, when a senior homeowner is getting ready to move, they plan to use the sales from their current home to purchase their new home. This can significantly limit a home buyer’s housing options for several reasons. However, a HECM gives you multiple financial choices when it comes to selling and buying your home.
For example…
Let’s say Jim and Rachel, both 68 years old, have $300k in sales from their current home and decide they want to move. Generally, retiring homeowners would prefer to not have a monthly mortgage payment to worry about anymore. This means that they can only look at homes that are within the projected earnings of their current home’s sale. And if they plan to do any renovating, landscaping, or decorating, then they will have even less funds, say around $250k, to buy a home with.
However, simply selling the home and using the money from its sale is just one option Jim and Rachel have.
Double Your Buying Power
Using a reverse home mortgage doubles your buying power, giving you more options than you originally thought were available. There are a few options for senior homeowners to choose from when using a HECM. Learn more about them below.
Option #1:
By using a federally insured reverse mortgage, you’re essentially able to double your funds without adding to a monthly mortgage payment. Now, Jim and Rachel have a few options to choose from here. The first option allows the couple to look for homes that are double their sales amount, meaning they can inquire about homes in the $600k price range and still have no monthly payments while living in the home.
Option #2:
Another option the couple has is to buy the home for $300k but only put down half of the money and use a reverse home mortgage to finance the remaining amount. Since the couple is only putting down $150k of their home sales, they get to keep the other $150k in the bank to use as they wish. And because they chose to use a HECM, there are still no monthly mortgage payments that need to be made.
Option #3:
Finally, the couple has one last decision to consider. With a reverse mortgage, you can choose whether or not you pay part of your mortgage payment and for how long. This is a good option for senior homeowners looking to keep up and build a line of credit in their name. HECM mortgages are typically made available through a credit line which you have access to when you need it.
So, say Jim and Rachel, at the age of 68, decide they want to pay $600 a month towards their mortgage for 10 years. After 10 years they decide to stop making payments and at age 78, the couple have built up a line of credit worth $92k which they can use and access as needed. Not only are the couple building their credit and, but they’re also gaining equity access growth by giving themselves some money to fall back on when it’s needed.
Applying for a HECM
Now that you know all of your options, it’s time to consider whether a reverse home mortgage is right for you. It’s important to note that the main purpose of a HECM is to give senior homeowners the financial freedom they need to live comfortably in retirement. Though there are some risks involved, reverse mortgages are generally a safe alternative to other types of mortgage loans. Before disqualifying yourself, speak with a Certified Reverse Mortgage Professional to see if you qualify for this type of loan. They’ll determine what you have to work with and get you prequalified to see where you stand.
Get a Reno Reverse Mortgage
If you are considering getting a Reno reverse mortgage, it is important to know your options. Certified Reverse Mortgage Professional, Chris Handy, will help you find the ideal situation to increase your monthly income and provide you the security you deserve. Chris is licensed in several states including: Arizona, California, Florida, Georgia, Idaho, Missouri, Montana, Nevada, Oregon, South Carolina, Tennessee, Texas, and Washington. He will analyze the current housing landscape and determine your eligibility amounts for a reverse mortgage—and make sure it makes sense to you.