Reverse Mortgage Information

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Why Would Seller Choose an Offer With Reverse For Purchase Financing?

It's a Question that is asked by Realtors®, Sellers and Buyers alike.  Why would a seller choose an offer from a buyer financing their home purchase with an "FHA-HECM For Purchase" loan?

Signing an Offer

Here are some compelling reasons that many sellers would and in fact do prefer this offer.

1. Owner occupied financing - In the current crazy market there is a growing sentiment among sellers to accept offers from buyers who are NOT investors as they want to see new families building memories and loving the home as much as they did.  Homeowners can be pretty sentimental even about a house they are selling.

2. A Reverse For Purchase requires a substantial down payment. We're talking 30% to 50% down - that gives sellers a sense of confidence in the "close-ability" of the transaction.  

3. Lower seller closing costs!  This is a great reason to accept a Reverse For Purchase offer:  According to guidelines the seller is NOT allowed to pay ANY of the buyers closing costs, none, zip, nada.  On top of that, the BUYER must pay for their own Owners Policy of Title Insurance as well as the Lenders' ALTA Policy of Title.  That saves the seller the highest closing cost, other than commission that they usually incur.  The Owners Policy on a sale of $500,000 here in California can run $1,400.00 or more.

4. Easy buyer qualifying - Buying with a Reverse For Purchase is relatively easy as far as qualifying.  Since there are not monthly mortgage payments on a HECM Loan, there is only very limited income qualifying - though that is likely to change soon.  Buyers must be over 62 years of age, plan to occupy the property as their principal residence and the property needs to be FHA compliant.

It's really all about the listing agent being informed and educated about this fantastic financing opportunity for senior home buyers.  It's also a great marketing tool for agents to help older homeowners make the decision to sell and downsize.  

Would love to hear what YOU think!

 

 

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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 3 commentsDeborah Nance • May 31 2013 12:58PM

Comments

Great info Deborah and something many agents are unaware - thanks for sharing your insights

Posted by Jennifer Mackay, Your Bay County Florida Realtor 850.774.6582 (Counts Real Estate Group, Inc.) over 5 years ago

Interesting. Have never heard of this loan. Not sure I see any advantages for the buyer.

Posted by Bill Reddington, Destin Florida Real Estate (Re/max Southern Realty) almost 5 years ago

Thands for the comments.  The biggest advantage for the buyer is that they have no monthly mortgage payments, just as if they had paid in all cash.  Granted, they don't have all the equity they would have if they'd paid cash.  A reverse for purchase will allow them to take the monies they didn't have to use for the home and beef up their retirement accounts. Of course, the buyer is responsible to stay current on property taxes and insurance, but so is an all cash buyer.  Another downside is the heir won't inherit a free and clear property.

Posted by Deborah Nance, Southern California , Reverse Mortgage Specialist (Orange County, Corona, Riverside, Los Angeles) almost 5 years ago

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