Denver Realtor: Larry Armstrong says an FHA program, HECM4P, allows retirees to buy a home, making no monthly mortgage payments as long as you live there.
Are you 62-plus and hate monthly mortgage payments?
If you could, would you like to move into your dream home without paying all cash (and depleting our portfolio/life savings) without making monthly mortgage payments – and save thousands of dollars you would otherwise lose in the process? If you and your spouse are 62-plus, a new FHA program is here to help. And you don’t have to wait for your existing’ home to sell. Let’s face it, since the fall of 2008, there hasn’t been much good news coming from the housing market or Wall Street. The FHAs Home Equity Conversion Mortgage for Purchase Program HECM4P comes at a time when a lot of cash strapped retirees have seen their portfolios depleted and home values drop, while they are still trying to boost their monthly incomes. This government-insured (FHA) program has been available since February 2009. However, most banks do not offer it. The FHA developed the HECM4P program because it saw many 62-plus homeowners selling their homes, buying smaller, more affordable homes and then taking out reverse mortgages on these new properties to create new cash flow. They paid closing costs up to three times – first on the home they’d sold, then on a new mortgage if they needed one to make the next purchase and then again if/when they took out a reverse mortgage. But now, the new HECM for Purchase allows you to buy your dream home with only one closing on your new home. And you don’t have to wait for your existing home to sell before buying your new one.
How does the program work?
The HECM for Purchase program is an age based mortgage backed by the FHA for folks aged 62 and older. Unlike traditional mortgages, our monthly payments are deferred so the loan balance increases over time. The loan is backed by the FHA, so neither borrower(s) nor their heirs are personally held liable for the debt. So… what’s all this really mean? It’s simple. Say you use a HECM to buy your dream home, making no monthly mortgage payments as long as you live there. Say 10 years later you decide to move When you sell your home, you will receive 100 percent of the net proceeds after paying of the loan balance at the time of the sale. This is exactly how a traditional mortgage works.
How do I benefit?
The primary benefit of HECM comes into play during the years you live in the home, because you aren’t making a monthly payment to the mortgage company. So, you are increasing your cash flow each month. Another benefit follows your heirs. What if – at the time of your passing – the loan balance exceeds the home’s value? What happens then? In a traditional mortgage, your heirs would be forced to sell the home at a loss and covert he difference. The terms of a HECM program mandate that neither you nor your heirs are personally liable to cover the difference if your home is sold for a loss. The FHA insurance program steps in to make up the shortfall.