REAL ESTATE PROFESSIONALS
You Can Help Retirees Maximize Their Purchasing Power
Baby Boomers dominate the U.S. housing market, comprising the largest share of buyers and sellers. The Home Equity Conversion Mortgage for Purchase (H4P) is designed for 62+ homebuyers. Learn more and you can help seniors live where they really want to while creating a business niche for yourself.
Here’s How Homebuying Works with an H4P
Basic Qualifications
–Age 62 or older
–Home is primary residence
–Able to pay property charges
–Counseling with a HUD-approved agency
–No delinquent federal debts
–Able to make down payment
Boost Buying Power
With an H4P, buyers combine the proceeds from their current home’s sale with the proceeds of a reverse mortgage to buy a new home. At Retire Right Mortgage, we’ve boosted our clients’ home buying power by up to 200% with an H4P!
Enjoy HECM Advantages
HECMs are insured by the Federal Housing Authority (FHA), which provides a host of consumer protections. Most notably, this makes HECMs non-recourse loans, which means the sale of the home will always cover the loan balance. This ensures that the borrower’s heirs won’t get stuck with a debt.
Eliminate Monthly Mortgage Payments
With an H4P, your clients will not have to make monthly mortgage payments on their new homes. Instead, they simply have to pay property charges that they already have to pay, such as taxes, insurance, and upkeep. This can be a financial game-changer when it comes to buying a new home, empowering retirees who think they can’t afford to move.
Down Payments and Closing
The down payment for an H4P ranges between 30-70% and is determined by a number of factors, including the borrower’s age and current interest rates. The H4P down payment is higher than a forward mortgage due to the HECM advantages, which makes it a great deal for the borrower over time.
Ownership and Loan Repayment
The borrower maintains full ownership of the home and no one can make them sell the home or leave as long as they comply with the loan terms. The loan is repaid by selling the home. Because it is a non-recourse loan, if the loan balance is higher than the home value at the time of sale, the FHA pays the difference. If, on the other hand, there are profits after settling the loan, the homeowners or their heirs get to keep them.
Here Are Two Very Common Homebuying Scenarios
Moving to a Home That’s Significantly
More Expensive
Tony and Silvia are both 69 years of age and they are proud grandparents. They would love to move to where their family lives, but properties are much more expensive than their current location. Their primary residence is worth $600,000. The equivalent home in their family’s area would be $800,000.
With a traditional mortgage, they could sell their current $600,000 home, significantly downsize, and cover the difference with their savings and other assets.
Or they could buy with a reverse mortgage for purchase (H4P). Their sale proceeds could be applied to the down payment and closing costs, and the proceeds from the reverse mortgage would cover the difference.
In the end, Tony and Silvia could own an $800,000 home closer to their family and never have to make monthly mortgage payments again. They would only have to cover property charges that they already have to pay, such as taxes, insurance, applicable association dues, and home upkeep.
Moving to a Home That’s Less Expensive
Terry is 67 and owns her home outright. It’s a large property valued at $800,000. While she loves her home, it’s way more house than she needs and the maintenance and cleaning has become burdensome, both financially and physically.
She’d like to move to a smaller new construction home that costs $650,000. Terry could simply sell her home and use the proceeds to buy the new home.
Or she could buy her new house with an H4P. She would put the reverse mortgage proceeds toward the cost of the new home, and use profits from the sale of her current home to cover the difference.
She would own her new home and have about $375,000 left over to use as she pleased. That’s about $225,000 more than she would have if she paid cash to buy her new home.
Terry would never have to make monthly mortgage payments again. Instead, she would only have to cover property charges like taxes, insurance, applicable association dues, and home upkeep.
*This advertisement does not constitute tax advice. Please consult a tax advisor regarding your specific situation. The homeowner is still responsible for paying property taxes, homeowner’s insurance, applicable association dues, and for maintaining the property.