FHA has rolled out a program under the Reverse Mortgage program for Seniors exclusively that will allow them to purchase Homes. The program as most people know it is a Home Equity Conversion Mortgage, but now it is also a home purchase program.
Builders, Real Estate people and Sellers alike need to understand the program and the impact that this program can have on the inventory that they have just sitting around. This is for an exclusive market; just like many in the past went after the first time homebuyer. The difference with this program is that the senior requirements are much different then any other mortgage program ever created.
The Fact about the program
- The Reverse Mortgage purchase Mortgage is for seniors who are over 62 and plan on living in the home as their primary residence.
- They must move into the home within 60 days of contract and application.
- They will be required to have asset that can be verified for the down payment and closing cost.
- The amount available is based on age of the youngest person and the appraised value of the home.
- There is not Credit or Income to qualify
- The amount of money required is based solely on age of the youngest person.
- Never make another mortgage payment for remainder of their lives.
If a senior is going to look to purchase a home they will need to have the funds available, they can come from many sources.
- Proceeds from the sale of an existing home
- Savings and Investments
- Inheritance, insurance
How ever they may not come from the seller of the home or and type of inducement to purchase at this time. However the mortgage is based on appraised value and not the purchase price. In addition; the mortgage cannot be used by investors who are looking to sell homes by using seniors and the basis to sell homes. The buyer of the home MUST be the senior themselves and they must live in the home as their primary residence.
In many cases where children of the senior who are considering moving in with the parent for care purposes the senior will be the only on the mortgage and the deed. If and when the senior ceases to occupy the home or passes on the note and the mortgage become due and payable.
For many seniors who are considering or who have sold the home that they live in and have realized a gain of equity on their homes up to $500,000 for a married couple this is a huge blessing. All of the gain up the maximum of $500,000 is considered tax free. So being able to purchase a replacement home without having to use a large portion of the proceeds to purchase will leave them with a very comfortable amount of assets for living until the end. They will also not have any mortgage payments for the remainder of their lives, the senior will only have to make property tax payments and insurance cost along with maintaining the home.
If builders, Realtors and sellers don’t think this is not a huge opportunity then they should look at the size of this market! There are currently over 40 Million people over the age of 62 and the Reverse Mortgage industry as a hole has only penetrated the market at around 1% of the total market to date.
It is also a fact that 10,000 people everyday are turning 62 years of age and that over the next 30 years the senior population in this country will reach over 86 million people or in percentages 25% of the entire population of this country will be over the age of 62.
For the senior who has realized a gain on the selling of the existing home and has a substantial amount of tax free monies using the Reverse Mortgage purchase program will be the best financial plan they could ever have available to them. They will have a larger sum of money that is tax free and never have to make payments for the rest of their lives so living will be a better way of life even if they did a Reverse Mortgage on the big unused or inefficient home that they live in now.
If the senior who had received a Reverse Mortgage in the past or someone had looked at the program in the last year and thought it was not a viable solution to income and security they need to take another look. It is not the same old program. The changes that have taken place in just the last two months have been earth moving for many seniors.
Here are the most recent changes!
- The elimination of the county limits on the amount available to borrow up to $417,000 and Until 12/09 $625,500
- The addition of a fixed rate Reverse Mortgage in addition to many adjustable programs
- The reduction of the calculation of the origination fees charged on the loan. This one change is worth thousands of additional monies in the seniors pocket alone.
The prohibited use of tactics of utilizing annuities, insurance or investments within the Reverse Mortgage program
There has never been a program outside of the creation of the Social Security Retirement program that can and will have a major and life altering effect on the senior population in this country and this one is a ONE HUNDRED PERCENT INSURED program and promoted by the US Government. So all Seniors, Builders, Developers, Realtors and Home Sellers alike you need to take a look at this program and think. This program can really make a difference.