Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
I posted much of this in another string so sorry for the cut'n'paste job However I can add a few things in regards to a reverse mortgage for purchases. there is not a lot of info out there about it.
- closing costs for a reverse mortgage for purchase are the same as a normal reverse mortgage. fha mortgage insurance, lender origination fee, third party fees (title, appraisal, counseling, state taxes, recording, ect). Depending on the lender, most or all of these costs can be financed in the loan- including real estate broker fees.
third party fees vary by bank and origination fees can often be negotiated. the fha mortgage insurance is sometimes higher on reverse mortgage for purchase since it varies depending on how much you borrow.
your responsibilities after doing a reverse mortgage for purchase are the same as with a standard reverse mortgage. pay property taxes, homeowners insurance, and maintain the property. if you buy a condo/townhome you also have to cover any HMA fees.
- the money you qualify for is based on either the appraised value OR the purchase price, whichever is lower. so if the home you're buying appraises less than the purchase price, you'll need to put more money down with a reverse mortgage for purchase because you qualify for less. the younger you are, the more you put down- I think its roughly 45-55%
the home that has the reverse mortgage must be your primary residence. if you're downsizing and need the money from the sale of your old home to buy the new home, you can do both transactions in the same day (sell in the morning, buy in the pm)
to a seller a reverse mortgage for purchase is like someone buying your home with a 50 ltv mortgage. to a buyer it's like buying a home with all cash, then doing a reverse mortgage. only you're doing it one transaction so you save fees. you don't get any monthly income or payments from the reverse mortgage after a purchase.
I believe on new reverse mortgages there have been changes to the program for spouses under 62 that allow them to stay in the home for life if the older spouse passes away. confirm this with a bank
crunch your own numbers but lets say you're in your mid 60's and live another 20 years. if you found a place to rent at $1,000/month- assuming rent never goes up- that's $240k in rent. for 50K down you can buy a 100k home with a reverse mtg for purchase- live there 30+years- just paying taxes, insurance and maintenance. can be a very good deal in the right situation.
Seems like there are two Reverse Mortgage discussions with some overlap and uniqueness. That can cause confusion if discussed at the same time. Isn't there one discussion about owning a home already and using the RM as a vehicle to cash out equity? On the other hand isn't this thread about using a RM to ACQUIRE home in order to minimize future housing cost. Two thoughts both similar and different.
there are two Reverse Mortgage discussions...
...one discussion is about owning a home already and using the RM to cash out equity
...on about using a RM to ACQUIRE a home
I didn't appreciate the distinction in my first post(s)...
only being familiar with the former sort and it's horrid reputation.
I remain leery.
I remain leery of retirees using a mortgage of any sort to purchase a home.
The main exception -as a cash flow tool- should still be tempered to a modest % of net worth.
I didn't appreciate the distinction in my first post(s)...
only being familiar with the former sort and it's horrid reputation.
I remain leery.
I remain leery of retirees using a mortgage of any sort to purchase a home.
The main exception -as a cash flow tool- should still be tempered to a modest % of net worth.
I understand your being leery. What I have seen as being a more workable RM for purchase scenario is for a soon to be retiree or retiree who is renting entering in one with 50% of the down payment and the RM for the remainder. It can free up monthly income for other things. I suspect that could be real estate market dependent as rentals in some areas are becoming very pricey.
this is a confusing topic. How can one "buy" a home with a Reverse Mortgage? To have a RM you must own the home which must be (and continue to be) your primary residence. If you own a home and take a reverse mortgage out to buy another then you would have to pay off the reverse mortgage when you move to your newly purchased residence. It would be much less costly and presumably more profitable to sell your home, take the cash to buy another.
I'm just very unclear on what you mean by "buying" with a reverse mortgage. How can you "buy" something you already own? I assume I'm missing something here!
this is a confusing topic. How can one "buy" a home with a Reverse Mortgage? To have a RM you must own the home which must be (and continue to be) your primary residence. If you own a home and take a reverse mortgage out to buy another then you would have to pay off the reverse mortgage when you move to your newly purchased residence. It would be much less costly and presumably more profitable to sell your home, take the cash to buy another.
I'm just very unclear on what you mean by "buying" with a reverse mortgage. How can you "buy" something you already own? I assume I'm missing something here!
Reverse mortgages are generally associated with refinancing an existing home. However, a reverse mortgage can be used to purchase a home. It is important to note that a reverse mortgage provides only a portion of the home's value. Therefore, when purchasing a home with a reverse mortgage, the critical inquiry is how much of a down payment is necessary to buy the home in conjunction with a reverse mortgage. Fortunately, the required down payment can be quickly determined with only some basic information and the assistance of a reverse mortgage specialist
Gene: Maybe you have decided to move to a different state, to a really nice home that you want to live in for the rest of your life. You can purchase that home with a reverse mortgage and not have any house payments on the loan forever. You still pay the insurance, Hoa, upkeep, etc. and the mortgage keeps on getting bigger and bigger, but you don't pay it back until you leave the home (or die). See my previous post to learn just how big your mortgage can get to be, after you take out the rm.
- closing costs for a reverse mortgage for purchase are the same as a normal reverse mortgage. fha mortgage insurance, lender origination fee, third party fees (title, appraisal, counseling, state taxes, recording, ect). Depending on the lender, most or all of these costs can be financed in the loan- including real estate broker fees.
third party fees vary by bank and origination fees can often be negotiated. the fha mortgage insurance is sometimes higher on reverse mortgage for purchase since it varies depending on how much you borrow.
This is good info, thank you. I bought my first home with an FHA mortgage, so this gives me a better idea what to expect.
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.
Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
However I can add a few things in regards to a reverse mortgage for purchases. there is not a lot of info out there about it.
