The process of planning for retirement is an experience that’s chock-full of varying events and pertinent details.
Regardless of what your aspirations may be or what your plans are in the long run, you will realize that planning for your life after work involves many details. From investments to compensate for the absence of income to healthcare plans for long-term care, the factors to consider and deal with are nearly endless.
And the most important of all these details? Purchasing the home you’ll spend the rest of your post-work life in.
A Solution Worth Looking Into
Admittedly, preparing for your future home can be a rather intimidating task because of how much money, research, and planning is involved.
With home costs rising and listings being swept up by fast-acting buyers left and right, it’s important to start planning and acting promptly when securing your retirement home. From location matters and structural preferences to set budgets and long-term values, there is much to worry about before finally investing in a property you can enjoy in your older years.
But while you may be wondering about how you’re going to buy your property above all else, there’s one solution that can help immensely: A HECM for Purchase.
A Home Equity Conversion Mortgage (HECM) for Purchase—as complicated as it may sound, it is rather straightforward and actually easy to understand.
Simply put, these types of financial solutions are a type of reverse mortgage that is insured by the Federal Housing Administration (FHA), allowing seniors to convert their home equity into cash. Through the years, this option has become popular because of its applicability to most conditions and situations.
Based on current guidelines, the amount that may be borrowed to buy a home with a HECM for Purchase is based on the home’s appraised value while being subject to FHA limits.
Available to borrowers sixty-two years old and older, this approach works by having money advanced against the value of the equity in the home as interest accrues on the outstanding loan balance. It’s worth noting that no payments are made until the home is sold, is no longer a borrower’s primary residence, or if the borrower dies—which means a loan must be repaid entirely.
How Does It Work?
One great thing about HECMs for Purchase is that they allow borrowers to choose to repay as much or as little as they’d like to each month. The result of this system is a buyer’s advantage as it allows them “right-size” to the home they want—all while keeping in stride with their financial and retirement goals.
Can You Apply?
Currently, the FHA offers and sponsors the home equity conversion mortgage while providing insurance on the products—allowing them to set the guidelines and eligibility for these options. However, qualified borrowers need to understand that they can only obtain HECMs from lenders that are approved to offer these products.
To be considered for a HECM for Purchase, applicants or interested and near-retiring homebuyers must abide by these key qualifications:
- Must be sixty-two years of age or older
- Must occupy the property as your principal residence
- Must not be a delinquent on any federal debt
- Must possess financial resources to continue making timely payment of ongoing property charges such as taxes, insurance, homeowner association fees, etc.
- Must participate in a consumer information session given by a Housing and Urban Development-approved HECM counselor
When it comes to properties, these are the set standards that a proposed listing must possess:
- It must be a single-family home or two- to four-unit home with one unit occupied by the borrower
- It must be a HUD-approved condominium project
- It must be a manufactured home that meets FHA requirements
(If you want to learn more about how you can use a HECM for purchase to right-size your way to a post-work life home, we’re here to help!)
Contact Michael Harrell Group Today!
When it comes to purchasing homes to retire in, few come close to the type of opportunities and advantages that HECMs for Purchase provide. Once you get to use this particular financial solution to your advantage, you can leverage the power of well-structured systems enough to finally acquire a great listing!