FHA announces the HECM for Purchase...
... a welcome new tool for new home purchase finance.
Government Reverse Mortgage providers have been given the green light begining January 1, 2009, to begin the use of the FHA Home Equity Conversion Morgage to finance the purchase of a new home.
Senior home buyers are finding finance options shrinking with the continued meltdown in the mortgage industry. And with number of Seniors purchasing new homes growing bucking the current real estate trend the timing for this new FHA program is most welcome.
How does it work? Just as with using a FHA HECM to refinance an exisiting home the same basic requirements are involved: the youngest home buyer must be at least 62 years of age and there must be sufficient down payment. Just as with any FHA HECM the homeowen now can live in the new home without ever having to make a mortgage payment.
For many senior's today "downsizing" is becoming a growing trend. It may be time to sell the large, multilevel home and find something easier to get around in and take care of or perhaps to move closer to family or town. The typical choice for many would be to use the proceeds from the sale of their original home to purchase the new home outright. And it comes with a suprise to many to find that smaller in size may not necessarily mean smaller in price. Moving from an older home outside of town to a smart new condo in town can easily cost as much if not more.
The HECM for Purchase allows the home buyer to purchase their new home with a government guaranteed FHA loan that not only allows them to live without any monthly mortgage payments but also allows them to keep a substantial portion of the purchase price in cash for their use. Or it can mean that they now can move into a home of much higher cost and quality than they could have otherwise.
How does it work?
Let's say you are selling your current home for $300,000.00 and want to move to a single level condominium. You traditionally would have only two options: first would be to secure a conventional mortgage - but banks are only lending to those with both good credit, and good income, something that many of those retired are finding out the hard way that they simply can not get a loan of any sort at this time. The second way for many then would be to simply pay cash for their new home.
But not today!
No Income No Credit!
Sound too good to be true! Well, it was until just recently when the FHA approved the use the HECM as a purchase finance tool. Remember that senior family that were selling their home to buy a new condo? Well, now they have two very significant options:
Option number one would be to purchase a $300,000.00 condo using the FHA HECM for Purchase... again, no Income Qualification and no Credit Qualification... they would only need to put down aproximately 30% to 50% and keep the remaining cash from their sale to spend ans they choose... AND... NO MORTGAGE PAYMENT FOR AS LONG AS THEY LIVE IN THE HOME!
Option number two is even more appealing to many. Rarely does "downsizing" today mean "downpricing", in fact, many times the new home even if it may be smaller can be more expensive than the home that is being sold. So, same family selling their home for $300,000.00 can also use the FHA HECM to purchase that new condo, maybe much closer to town, or with much nicer amenities in the new price range of $500,000.00 or more... and again - with NO MORTGAGE PAYMENT!
Please, call today to learn more about this exceptional opportunity.
And a special note to Realtors - call me today for our Continuing Eduction State Accreditied Class, good for 3 clock hours on the the FHA HECM for Purchase - today!