If you’re a senior looking to downsize, a reverse mortgage could help. The Home Equity Conversion Mortgage (HECM) for Purchase could help you buy a new home and avoid making monthly mortgage payments. Here’s how it works.

Moving to a New Home

The HECM program is targeted at people 62 and up who want to sell their current home and use a reverse mortgage to downsize to a less expensive home. It can also be helpful for seniors who want to sell their current home and relocate to be closer to family or find a home that is better suited to their physical needs.

How Reverse Mortgage Works
If you take out a reverse mortgage, you’ll typically receive payments from your lender on a monthly basis, as a line of credit, or as a lump sum. You may also be able to receive the funds through a combination of those methods, and you can change the payment terms at any time. The amount you’ll qualify for depends upon your age, current interest rates, and the value of your home. Depending upon the area you live in you may qualify for a reverse mortgage up to $625,500.

Seniors applying for a reverse mortgage through the HECM for program will have their finances reviewed, but won’t have to worry about their income or credit impacting their ability to get the new loan. Because the reverse mortgage won’t have to be paid back until you no longer occupy your home, there are no monthly mortgage payments. Once you leave your home or die the loan balance, including accrued interest and mortgage insurance premiums, will be due.

You can only get a reverse mortgage on your principal residence. It can be a single-family home or have up to four units. Condominiums may be eligible if they are in Federal Housing Administration-approved developments.

This entry was posted on Thursday, April 23rd, 2009 at 4:55 pm and is filed under Reverse Mortgage . You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.