One of the hidden gems within the reverse mortgage program has long been the ability to purchase a home with it; the Reverse Mortgage for Purchase program. But within that program was a frustrating rule – the requirement that the home being purchased have a Certificate of Occupancy before a loan application could be submitted. This meant seniors seeking this option were limited to pre-built homes. Well, this rule has changed. Here’s the scoop:
Late last month, the FHA announced that it will allow mortgagees to take applications for HECM Reverse Mortgage for Purchase loans from potential borrowers without a certificate of occupancy and before the completion of reverse mortgage counseling. The FHA will not insure the loans until the local officials deem the property to be habitable and issue a certificate of occupancy. Lenders will be responsible for getting the appropriate paperwork once it is available.
The Reverse Mortgage for Purchase program allows seniors to purchase a home using a reverse mortgage and live mortgage payment free. To qualify for this program, borrower(s) need to be age 62 or older, be purchasing a home to become their primary residence, and have their “required investment”. The borrower will still be the homeowner and will always retain the title. In addition, similar to a homeowner who owns their home free and clear, there will not be a monthly mortgage payment but the borrower will still be required to pay property taxes, homeowner’s insurance, HOA fees, and basic upkeep and utility payments.
The borrower can use this loan to purchase single family homes, town homes, and FHA approved condos.
Janis Layman is a Reverse Mortgage Specialist serving the Seattle, Lynnwood, Edmonds, and Shoreline areas of Washington. Contact Janis and learn if reverse mortgage is right for you.