Can I buy a house with a reverse mortgage?
There are two ways to buy property with a reverse mortgage. Here are examples of each.
Mr. and Mrs. Z own their home in Southern California. They have lived there for 50 years and wouldn’t dream of moving away. They dream of a vacation home in the green state of Oregon, not far from a great fly fishing river and only an hour away from their youngest son, daughter in-law and 3 grandkids. They seem to visit at least 3 or 4 times a year, but always enjoy coming home to the house they raised the family in where they know everyone, and are involved in the community. The last trip up, they saw a cute 2 bedroom home for sale in the perfect spot. The asking price, only $195,000, sure it doesn’t have garage but it’s a perfect get away home, just what they’ve always dreamed of. They don’t want to take funds from their retirement to buy it, and certainly don’t want to have a mortgage on it that would eat into their cash flow. Instead, they take out a reverse mortgage on their home in Southern California. The reverse mortgage proceeds net them $210,000 in cash. They buy the vacation home for cash and use the rest of the funds to repaint and furnish it. They even have enough left over to put in a new tile floor in the kitchen and master bath of the house in California!
They still have no house payments in California AND they have a vacation home in Oregon free and clear that they can enjoy. The grown kids are thrilled because mom and dad have a cool vacation home that they will inherit free and clear and they don’t plan to keep the house in California after their parents pass away – it’s a win win for all concerned.
Mr. J is a widower who has recently found love again. He and his bride to be recently each sold their previous homes and are thinking about paying cash for a new home. Instead, they decide to save some of their cash and purchase their new home with a reverse mortgage. They find a great home at Trilogy in Corona, a 55+ resort style community with a gorgeous golf course and a clubhouse to die for. Trilogy is full of leading edge baby boomers like them and they have some friend there already. They put $180,000 down on the new home and the reverse mortgage finances the balance of the $400,000 purchase price.
So, $180,000 gets them into a newer home in a great, safe, luxury community with no mortgage payments and they have a nice not so little nest egg from the balance of their proceeds on the sale of their two homes. In fact – they think about keeping one of the homes as a rental property. Hmmmm.
Yes – they must always keep current on taxes, insurance and HOA, just as they would if they paid all cash.
So my Realtor friends, do these stories bring anyone to mind? If so, please feel free to give me a call and let’s brainstorm about how FHA Insured Reverse Mortgages can help you sell more
By Deborah Nance
Your Local Southern California Reverse Mortgage Professional
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iReverse Home Loans, LLC, NMLS#810502 originates reverse mortgages in Alabama, Alaska, Arizona (MB-0919584), California, Colorado, Connecticut, Florida, Illinois, Indiana, Iowa, Kansas, Louisiana, Maryland, Massachusetts, Minnesota, Mississippi, Missouri, Nevada, New Jersey, New Mexico, Ohio, Oregon (ML-5378), Pennsylvania, South Dakota, Tennessee, Texas, Utah, Vermont (1164-MB), Virginia, Washington and Wisconsin.
Important Information: Reverse Mortgages are neither "endorsed" nor "approved" by the Federal Government. The FHA (Federal Housing Administration) provides certain insurance benefits for lenders and borrowers in connection with the lender’s HECM loans; the FHA does not make or originate loans. The owner(s) retain title to the property that is the subject of the reverse mortgage until the person sells or transfers the property and is therefore responsible for paying property taxes, insurance, maintenance and related taxes. Failing to pay these amounts or failure to maintain the condition of your property may cause the reverse mortgage loan to become due immediately. A reverse mortgage is a complex loan secured by your home. Whether such mortgage makes sense for you depends on your financial situation and needs. For these reasons, we strongly recommend that you consult with a qualified independent housing counselor, family members and other trusted advisers before making this decision. This website is not from HUD or FHA and was not approved by HUD or any government agency.