California Reverse Mortgages by your Sacramento Reverse Mortgage Provider

Buy A Home Without A House Payment!

by Zachary Scott
May 22, 2009

Imagine for a second purchasing a home with a huge money deposit – say 40 p.c or so – and never having to make another home loan payment.

You might take advantage of a new reverse mortgage program, one of many monetary motivations and other goodies that were a part of the 2008 Housing and Industrial Recovery Act passed by Congress responding to the tanking U.S. Economy in the fading days of the Bush administration.

The Fed. Housing Administration program has some catches : Buyers have to be at least 62 ; the property being bought must be a principal residence and owner-occupied ; the program covers houses valued at close to $625,500 ; and the down payment is important, regularly more than twice that of the normal twenty % required of most standard financing packages.

In addition, reverse mortgage costs and charges are much higher than for traditional loans.

As it is an FHA program, buyers must pay two p.c of the property’s valued price – up to the maximum price of $625,500 – as a premium for Fed mortgage insurance.

That fee is on top of the standard closing costs. Nevertheless, the new program offers some creative options to home purchasers and house owners, even if they’re not yet 62.

It may be a livesaver and help you get a property that you normaly could not have afforded otherwise.

A Reverse Mortgage with a Twist.

Reverse mortgages have been around about twenty years, but they’ve had restricted appeal.

For one reason, they only worked for those that owned their properties outright or had serious equity ; for another, over time, the borrower gave up equity for regular money payments.

This decreases the value of what’s frequently the biggest single asset in an individual’s estate, their home.

Traditionally , reverse mortgages paid borrowers cash every month in return for an augmenting slice of the equity in their houses, thus the name "reverse. It’s a financing tool for seniors to age in place" without the angst of an once per month home loan payment.

When the owner or owners died or moved, the home would be sold and the bank recovered the cash paid out, and interest.

The left over money went to the owners, if they were still alive, or their successors.

HECM stands for Home Equity Conversion Mortgage, the FHA term for a reverse mortgage.

The new program, known as HECM for buying, permits those that qualify to make an enormous money down payment on a home or apartment and use the reverse mortgage as permanent financing for the remainder of the home price.

The dimensions of the down payment varies depending on the age of the purchaser and the interest rate of the loan.

The older the borrower, the bigger the quantity of the home price that may be sponsored.

Between the ages of 62 and sixty five, for instance, borrowers can qualify for roughly 52 p.c of the acquisition price at current mortgage rates.

So on a $300,000 property, the one off deposit would be $144,000 and closing costs.

Similarly , if rates fall, purchasers of the same age would be in a position to finance a bigger portion of the purchase price, reducing their money outlay.

After that, the owner or owners would only need to pay property taxes, insurance and upkeep costs for so long as they live in the home.

Like the older sort of reverse mortgage, no taxes are levied on the profits of the HECM for buying loan.

Creative Options Using a reverse mortgage to buy a home offers eligible buyers a number of new and creative strategies to get a principal residence.

One of the most typical eventualities concerning reverse mortgages is that of a pair who reaches retirement age – generally empty nesters – who want to downsize and eliminate home loan payments.

The HECM for sale program provides a chance for them to sell their existing home and use the equity to make the money down payment on a smaller one.

The purchase program, really doubles the buying power of eligible buyers.

Under the program, a pair with a $1,800 standard payment on a home in which they have $250,000 in equity could sell the house, use $150,000 of their equity to purchase a $300,000 apartment and never make another home loan payment.

They might then have $100,000 in money that might be used for any reason, for example bolstering their pension savings or allowance earnings.

Another example of an eligible couple who owns a home outright and comes to a decision to refinance using an HECM for buying mortgage, pulling $500,000 out in an one-off sum, which then can be employed for an all-cash acquisition of a holiday home.

The couple ends up owning both houses and makes no payments on either for the remainder of their lives.

Expansion potential regardless of the current desperate state of the money markets in the U. S.

Many industry commentators foretell that there’s a reverse-mortgage boom just round the corner that may only be sped up by the new HECM for sale twist.

The program should seriously expand the number of folks 62 and older across the nation who can afford houses at prices that were heretofore unattainable.

Suitability for HECM for sale loans Buyer :

— People and couples must be at least 62.

— Borrowers must occupy the property as their principal residence within sixty days of closing.

— There are no credit or revenue needs.

Sorts of dwellings :

— Existing single-family houses, apartments, made houses and 2-4 unit properties eligible.

— Co-operative units and bed-and-breakfasts are ineligible.

Source of funds :

— Savings, retirement accounts and proceeds from liquidation of private property of sale of current home.

— Unsatisfactory : Gifts, credit card advances, bridge loans, private loans, loans against private assets and subordinate liens.

See if you qualify today…Free quote from us is easy and has no obligation, just fill out the form on the right of page or call us at 866-309-6626.