Reverse Mortgage Information

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SRES Realtors - Will the HECM For Purchase Really Help Your Business?

 

SRES Realtors - Do you know how to explain the HECM For Purchase to your buyers?
SRES Realtor
Will it really help your business?

First of all - what is a HECM For Purchase?  HECM stands for Home Equity Conversion Mortgage (HUD loves acronyms!) FHA defines “HECM for Purchase” as a R.E. purchase where title to the property is transferred to the senior buyer, which the buyer will occupy as a principal residence, and, at the time of closing, the HECM first and second liens will be the only liens against the property. Whew!

Here are some of the benefits of using an FHA Reverse (HECM) Mortgage for purchase:
  • Easier Qualifying – Your clients will not have to “qualify” for monthly payments on the new purchase transaction. A significant detail to senior buyers on a fixed income. * Certain transactions will require some “qualification” – ask your Reverse Mortgage professional for specific details.
  • More Purchasing Power – Gives clients who are downsizing more purchasing power than if they had to pay all cash allowing them to buy a better quality home, in a nicer neighborhood - giving them, you and their families peace of mind about their dream retirement home.
  • Simplified Transaction – Back in the day, your senior buyers would have to purchase the home with cash or traditional financing and then afterward, refinance into a reverse as a separate transaction.  Now it can all be handled in one transaction.

How does this product benefit your real estate business?  A reverse for purchase is a niche product, but your expertise and know how can benefit you in 2 major ways.

Income – Higher Commissions and Double Commission
  • By allowing you to list a seniors current home for sale and showing them how they can afford to buy a home or condo instead of renting, you will set yourself apart from other agents & brokers – and earn a commission on both properties!
  • By allowing you to show a client higher value homes you stand to earn a higher commission in dollars
  • Goodwill + Expertise = Client Referrals. As a professional Realtor you already know how putting your clients’ best interests first generates trust and rapport, setting the stage for happy clients who will “sell you” to their friends and family. The specialized knowledge of using a HECM for purchase places you at the top of your game. Clients expect you to know about all things “Real Estate” - exceeding client expectations is one more key to generating new client referrals
How Does it Work?
  • The FHA Maximum Lending Limit for Reverse Mortgages is $625,500
  • Down Payment (LTV) varies Depending upon age
  • Down Payment varies based upon current Expected Rate
  • Your Reverse Mortgage consultant will utilize a special HECM Calculator to help you to determine the amount of funds your buyer will need to bring in.  Conversely, if you know your available funds for a down payment, your consultant can estimate the maximum purchase price for your buyer. This will allow you to select appropriate properties to show your clients.
  • – In order to ensure the smooth processing and closing of this type of transaction, it is recommended that the selected Title and Settlement Agency’s have prior Reverse Mortgage closing experience. Closing delays can result from inexperienced vendors.
A “Sample Transaction” - Bob Buyer (75 years old) is purchasing a single story home and selling his two story family home. The proceeds on his existing home after all expenses will be approximately $190,000.   With $190,000 to put into a new home and a HECM loan he has the purchasing power to obtain a home valued at about $575,000. He doesn’t particularly want a home that expensive, but it frees up his Realtor to show him higher end homes in senior gated communities better suited to his retirement lifestyle. (Based upon rates & features available 12/20/2010)

I would love to hear from you if you would like to learn more, and since I’m not shy, I’d be happy to give your office a presentation on the HECM for Purchase!

 

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By Deborah Nance

NMLS#202003

Your Local Southern California Reverse Mortgage Professional

How Much Do You Qualify For?

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Equal Housing Lender

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.

Comment balloon 1 commentDeborah Nance • December 20 2010 11:10PM

Comments

Deborah - Thank you for sharing a very good information on the HECM for home purchase.
Posted by John Pusa, Your All Time Realtor With Exceptional Service (Berkshire Hathaway Home Services Crest) almost 8 years ago

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