“HECM for Purchase” Reverse Mortgage Program  

The U.S. Department of Housing and Urban Development just announced the January 1, 2009 release date of the "HECM for Purchase" Reverse Mortgage. Under this program seniors will not be required to purchase their home and then apply for a HECM Refinance, saving seniors thousands in closing costs. 

Seniors will also be pleased to know that the HECM for Purchase Reverse Mortgage calculation uses the appraised value and not the actual purchase price. That means if you are buying at a price below market price you would get more money on the reverse mortgage than if we were required to make the calculations using the actual purchase price.

 The HECM for Purchase program is available for 1-4 unit properties where the primary residents are aged 62 or older. Only properties where construction is completed are eligible for FHA insurance under the HECM for Purchase program. HECM loan proceeds may be used to satisfy outstanding payment obligations associated with a land contract, contract for deed or other similar purchasing arrangements that will ensure the property which will be used as collateral for the Reverse Mortgage. The property must meet all FHA requirements.

 At closing, reverse mortgage borrowers must provide a down payment to satisfy the difference between the net HECM money available (reverse mortgage loan amount) and the sales price for the property, plus any reverse mortgage loan related fees that are not financed. Down payment money cannot be financed.  

 * Appraised Value/MCA is defined as the maximum claim amount and is used to determine the principal limit which is the lesser of the appraised value or the FHA national mortgage limit.  The principal limit is the maximum amount available to the HECM mortgagor.** Assumes the age of the youngest HECM mortgagor is 67 and a principal limit factor of .665 for a 5% expected average mortgage interest rate.

The following property types are ineligible for FHA insurance under the HECM for Purchase program: 

• Cooperative units; 
• Newly constructed principal residence where a Certificate of Occupancy or its equivalent has not been issued by the appropriate local authority;
• Boarding houses;
• Bed and breakfast establishments;
• Existing manufactured homes built before June 15, 1976; and
• Existing manufactured homes built after June 15, 1976 that fail to conform to the Manufactured Home Construction Safety Standards, as evidenced by affixed certification labels (e.g. data plate and HUD certification label) and/or lack a permanent foundation as required in HUD’s Permanent Foundations for Manufactured Housing Guide.

 The HECM for Purchase will be a great opportunity for senior first time homebuyers, and those with poor credit or insufficient income to qualify for a traditional purchase loan. Qualification for a Reverse Mortgage is not dependant on a credit score, and since there are no monthly payments the senior's income does not matter. 

Senior homeowners looking to sell and buy will also benefit with the HECM for Purchase. The sale proceeds together with a Reverse Mortgage can be used to purchase their next home. By not having all their money tied up in their home they will have extra money to live a healthy and happy retirement. 

Please call me if you have any questions. I help senior homeowners who need extra cash for living achieve financial freedom for life. You need the facts to make an informed decision. For more information, to ask questions or to receive a complimentary brochure contact me toll free at 815-654-7100 or on the web at www.SimpleReverse.com.