Making the Right Home Affordable for Seniors

HECM with cartoon dog

Written by Starhaven Villas

August 5, 2021

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Rarely are we actually in a position to “have our cake and eat it, too.”

If you are at least 62 years old and looking at buying a home but don’t want a mortgage payment, take a look at the Home Equity Conversion Mortgage (HECM)!

Believe it or not, over 50% of our seniors buying a home today are leaning toward the HECM. Traditionally, the only way to avoid a mortgage payment was to pay cash for the home.

The American Dream should be more than owning a home outright after paying a mortgage for decade after decade.

What is the benefit of using a reverse mortgage to purchase a home?

Regardless of the reason for relocating, purchasing a home as a senior often presents a number of common dilemmas or challenges. In some cases the profit from the sale of their current home is inadequate to pay cash for the home they wish to purchase. Perhaps for financial reasons, they need to retain some of the cash from their sale to help supplement retirement income. In either case, the home buyer would need to apply and qualify for a mortgage—and then make monthly mortgage payments. As a retiree with a limited income, this may not be an option. It is also safe to say, even if they could qualify for a traditional mortgage, the last thing a senior needs or wants is a monthly mortgage payment. For these reasons, many seniors who prefer or need to relocate will opt not to, or will settle for a home that does not fully meet their needs.

Don’t settle for a home that doesn’t meet your needs. Affording a Starhaven Villas home could be within your reach!

The solution may be a reverse mortgage.

  1. Qualifying for the reverse mortgage has limited or less credit, employment, income or net worth requirements.
  2. The amount of mortgage funds available is based on the borrower’s age, the purchase price of the home and the current interest rate–not on a preset loan-to-value.
  3. Historically, the interest rate on a reverse mortgage is more favorable than other types of mortgages.
  4. The borrower may qualify for a larger mortgage than is needed based on their available down payment. In this case, they may retain part of their sales proceeds for personal use, or they can use the remaining reverse mortgage funds as an open line of credit to be used at their discretion in the years following the closing.
  5. The homeowners will never be required to make monthly mortgage payments as long as they reside in the home. The loan can be paid down or paid in full at any time with no prepayment penalty.
  6. There is no term on the loan. By statute, the reverse mortgage is an open-ended loan which does not expire until the 150th birthday of the youngest borrower.
  7. This is a non-recourse loan. Regardless of the future payoff on the loan, the homeowner or their heirs cannot be held liable for any loan balance beyond the value of the home at the time the loan is being repaid; however, any profits from the future sale belong to the homeowner or their heirs.

So, have your “cake and eat it, too” take a look at the HECM.

About the Author

Brian Crist is a 28-year veteran of the mortgage business. He specializes in all types of residential mortgage lending with a focus on clients’ goals. He can be reached at 80-901-6209.

Brian Crist

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