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Riverside & Corona Real Estate
New Reverse Mortgage Helps Seniors Purchase HouseThe purchase Reverse Mortgage Program is designed to allow seniors to purchase a new home and never need to make monthly mortgage repayments for as long as they live in the home. The new reverse mortgage law that makes this possible took effect on January 1st 2009. The law requires that FHA insure reverse mrtgage loans to be used for purchases. What this means for senior borrowers is that they can now purchase a home using a reverse mortgage instead of the traditional mortgage. So seniors who wanted to purchase a new home but who do not have good credit, a steady substantial income or were not comfortable with beginning to make monthly payments all over again at that period of their lives, can now easily do so with the already effective reverse mortgage purchase loan. Traditional reverse mortgage loans are meant to allow seniors above 62 to receive a steady income from their home equity. It affords a senior who is comfortable with his present home to remain in it and still access steady income. However there are many seniors who are not comfortable with their present home as it no longer suit their needs. Their options are usually only limited to remaining in the house in which they no longer feel comfortable or selling and then renting an apartment elsewhere which many people consider worse. With the new purchase reverse mortgage purchase loans seniors do not have to cough out the full monetary value for their new home and would not have to make monthly repayments as long as they reside in the home. To qualify the senior has to be over 62 and presently own a home. There is no income or credit criteria needed to qualify although they must be able to maintain the new home and pay for relevant tax and insurance fees. So a senior with a home who needs a different home would apply for a purchase reverse mortgage loan and FHA will insure the loan. The value of the former home is appraised alongside the new home to ascertain if and how much initial down payment would be required and what balance from the sale would return to the senior. An advantage of this new program is that HUD appraises the former home at its actual appraised value and not by the FHA usual method of using the quick sale value. The quick sale value is the value of the property if it had to be disposed off very quickly. This value is usually considerable lower than the actual value of the home. With the new method, a senior may not even have to make any down payment for the new home. So seniors buying a new house will enjoy the benefit of the actual higher appraised value of their old property. This reduces considerably and even sometimes completely eliminates the need to make a down payment for the new property. It also leaves the senior with extra funds. To benefit more from this new program, seniors may choose to downsize by moving into a smaller home or cheaper community closer to family and friends to eliminate the need to make any extra down payment and also leaves them with more extra proceeds from the sale of the old home for their personal use. The new program is even made more attractive when one considers that they would not have to make any monthly mortgage payments for as long as they reside in their new home.
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