A Reverse Mortgage for Purchase Success Story

A Reverse Mortgage for Purchase Success Story

A baby boomer in Orange County recently turned straw in to gold by the use of the Reverse-Mortgage-for-Purchase Program. The homeowner was on the fence about listing her home until the Realtor explained that the Reverse-Mortgage-for-Purchase Program could increase her purchase power. She could more than double her net proceeds from the sale of her current home and eliminate her monthly mortgage payments. She never dreamed this was possible and thought she’d have stay in place and continue to struggle making her mortgage payments.

After she sold her current home, she purchased another using a reverse mortgage instead of a traditional loan. She only put down $295,000 of the $395,000 she had left over in net proceeds after the sale of her previous home. The Reverse-Mortgage-for-Purchase picked up the difference on a new $600,000 home, she retained $100,000 from the net proceeds of her previous home, and now will never have a monthly mortgage payment for the rest of her life. That’s a Win-Win Situation!

If you either have enough cash in the bank and are renting, or enough net proceeds (equity) from the sale of a home that could be used as a down payment along with a Reverse-Mortgage-for-Purchase, please call or email us. It shouldn’t take more than a few minutes to find out all your options.

We specialize in helping seniors with HECM for purchase and we guide our clients to obtain a reverse mortgage and help them find a home that will fit their needs and lifestyles. If you would like more information or have questions about this program, please call me, Diego Loya 714-989-6040 and I will be more than happy to assist you.

Couple Uses HECM Mortgage To Buy Dream Home

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A person over the age of 62 can use a HECM, Home Equity Conversion Mortgage, to purchase a home. A HECM is a FHA insured reverse mortgage. Here is a real life example of a couple that used a HECM reverse mortgage to purchase a new home that fit their needs and dreams.

Andy and Beatrice Hollimon had endured Midwest winters for decades, and it was time to fulfill their dream of moving south.

“We owned our home in St. Louis area for quite some time, and we vacationed in South Florida the last five to six years,” Andy says. “We were looking to change locations for retirement and were zeroing in on the geographic region that we preferred.”

Andy had worked in human resources management for 40 years and later worked as an adjunct instructor and business administration department chair at Stevens — The Institute of Business & Art. He had worked hard, and they wanted to buy their dream retirement home without dipping into their retirement savings and investment income. They didn’t even think it was possible to get the type of home they ended up buying until watching a television commercial on HECM mortgages.

This form of reverse mortgage required them to put up only a portion of the purchase price, and the reverse mortgage would cover the rest. They would be responsible for the property taxes, insurance and homeowner’s association dues.

The move ended up enabling the couple to retire 10 years sooner than they thought they could (Beatrice had planned to keep on working).

“We lived in a small three-bedroom home since 1979, and it was nicely remodeled and 1,300 square feet,” Andy says. “We were planning on a smaller villa or even renting a home or something like that in Florida. But when we came down here last June, we ran across properties that piqued our interest that were larger. Some were in gated communities and some were on golf courses, but I don’t golf.”

In December, the Hollimons happily moved into their 2,000-square-foot, three-bedroom home in Lake Worth, 56 miles north of Miami.

The couple had lived since 1979 in their St. Louis home, which had three bedrooms and had reached a value of $160,000 before the subprime crisis. The house dipped substantially in value before increasing back up to $115,000 when the housing market recovered.

The Hollimons had a small home equity loan on the St. Louis home and wouldn’t be able to capture the full amount from the sale.

St. Louis Couple Uses HECM Mortgage To Buy Dream Home In Florida

Their home in Lake Worth measures 2,000 square feet, and they acquired it for a price of $275,000, some $5,000 less than the owners were seeking. To purchase the home, the Hollimons needed to put up 55 percent or about $141,000. Knowing they would get less than that from the sale of their home in St. Louis, the purchase would mean dipping slightly into their investment portfolio.

“If I would have needed to take a whole lot more in investment income, I wouldn’t have purchased that nice of a home,” Andy says. “I only wanted to deplete my investment portfolio to a certain level. I’m a frugal guy, and it broke my heart to do that much.”

They were willing to do that, however, knowing that they would never have to make a mortgage payment, and because they weren’t worried about the need to leave their home to someone when they died.

“We don’t have a large family,” Andy says. “My daughter is pretty well squared away in her home and income, and we didn’t have any interest in leaving a home to family members. They have the right to purchase it once we are out of the property, but I doubt my daughter would do that.”

Andy says that made him stop and think — since he didn’t have to worry about leaving their home to anyone, it was time for the couple to follow their desires.

“We were going to follow our dream and seek our dream location,” says Andy, who spends his retirement writing and painting. “If you have the financial ability, you have to reach for what you want. We decided to do that.”

This article originally posted on www.huffingtonpost.com/buck-wargo/st-louis-couple-uses-hecm-mortgage-to-buy-dream-home-in-florida_b_7662948.html

We specialize in helping seniors with HECM for purchase and we guide our clients to obtain a reverse mortgage and help them find a home that will fit their needs and lifestyles. If you would like more information or have questions about this program, please call me, Diego Loya 714-989-6040 and I will be more than happy to assist you.

How to Buy a Home Using a Reverse Mortgage

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Planning for Retirement

This article is as much for homebuyer and homeowners 62 years or older, as it is for the adult children of aging parents.

Reverse mortgages are primarily about providing financial options that include allowing you to leverage your home’s equity to help subsidize increasing health costs, or supplementing retirement income to realize a higher quality of life.

I encourage adult children of aging parents to educate themselves about reverse mortgages as an opportunity to allow, and encourage your parents to consider how a Reverse Mortgage can help allow for a better quality of life as they plan for their future.

Buying for Retirement

The home that you raised your children in is not always the best home for you to spend your retirement years in. Most times, for those of you with larger families, it just doesn’t make sense to have all of the extra bedrooms, not to mention stairs leading to upper or lower floors of your home.

If you currently own your home free and clear, or are close to it, there are several options for you that can provide for a much more active retirement.

Example – Moving into a Better Retirement

Let’s say you simply do not need as much home as you own currently, would like to move closer to family, or simply want to move to a retirement community that offers greater amenities and access to activities.

Using a Reverse Mortgage could give you the ability to sell your current home, and put a fraction of the proceeds into a new Equity Conversion (Reverse) Mortgage, leaving the remainder of the proceeds as reserves, or to invest in vehicle that increases monthly cash flow with no mortgage payments to be made on your new home.

As an example, let’s say a homeowner is 71 years old and has $300,000 of equity in your current home. For this example, you are also purchasing a home that costs $300,000.

The quick and easy answer would be to sell your existing home, and use the proceeds to purchase your new retirement lifestyle, leaving you with only property taxes and homeowner’s insurance to worry about.

With a Reverse Mortgage, you could put down just over $140,000 toward the purchase of the new home, and still have NO PAYMENTS for as long as you live in the home, again only being responsible for property taxes and homeowner’s insurance.

You accomplish the exact same goal as before, except you are now $160,000 more liquid, which you can use to set up college funds for your Grandchildren, invest in cash flow vehicles to increase your monthly income, or keep as cash reserves for emergencies.

No Credit, No Income, No Problem

Qualifying for a Reverse Mortgage hinges on two factors, the age of the borrower, and the equity in the home. Your income and credit profile are never taken into consideration.

This is an often overlooked benefit of using a Reverse Mortgage that prevents many seniors from accessing their retirement equity because they are under the impression that they do not earn enough money to take out a loan, or your credit is not perfect.

If your income and credit allows you to qualify for a home loan, or home equity line of credit, using the above scenario, you can access $140,000 of the equity in your $300,000 home to purchase your new home using a Reverse Mortgage, and rent out your current home, collecting enough rent to easily cover the mortgage payment on the new loan.

In this scenario, you retain your current home, create residual rental income, and have the ability to purchase your dream retirement home with no payments for the rest of your life, without having to income qualify.

Myths and Misunderstandings About Reverse Mortgages

There are many myth and misunderstanding about Reverse Mortgages that prevent seniors, and adult children of aging parents from even considering this as an option. Let’s take a look at some of the more common concerns we hear:

Myth #1: The Lender Owns The Home – This simply is not true. You retain title to your home, and have the ability to sell your home at any time. Your heirs have 1 year to refinance, or sell the home once they receive title to the home upon your passing.

Myth #2: The Home Must Be Free and Clear – Many homeowners actually use a Reverse Mortgage to pay off an existing mortgage and eliminate monthly mortgage payments.

Myth #3: Only Poor People Need Reverse Mortgages – The perception that reverse mortgages are only used by low income seniors because they have no choice is quickly changing.

Many affluent senior homeowners with multi-million dollar homes and large retirement assets are using Reverse Mortgages as part of their financial and estate planning. Consult your financial professionals and estate attorneys about how this option may enhance your overall quality and enjoyment of life in your retirement years.

Working with a Creative Lender

As a direct lender in California, we pride ourselves in being on the cutting edge of creative financing solutions. When I say “creative” I mean that we know our guidelines, and we know how to fight through the hurdles of complicated situations that others may not have the experience or patience to figure out.

A Reverse Mortgage is not the best solution for everyone. However, having the ability to educate yourself about the many incredibly beneficial options available to you, or your aging parents, puts yet another option on the table for meeting financial goals, and improving your quality of life.

Our phone number go to our cell phones, and we are available when you have a question.  Don’t be afraid to leave a message, I promise we will get back to you in a timely manner.

This article originally posted on www.FindMyWayHome.com