How It Works
With a Home Equity Conversion Mortgage for Purchase (H4P) loan, you apply those loan proceeds to the price of a house you want to buy. You can use the equity from the home you are leaving or other funds to cover any leftover balance.
This can increase your purchasing power tremendously because it adds the funds from a reverse mortgage loan on top of the other assets that you already have, including the proceeds from the sale of your current home.
Buying a New Home With a Home Equity Conversion Mortgage (HECM) for Purchase Loan
Then What Happens?
You enjoy the same terms for any home with a reverse mortgage loan:
Who’s a Great Fit for a Reverse for Purchase Loan?
The following are just a couple examples of people who find the living situation that’s best for their golden years.
Moving to the Perfect Neighborhood
James and Mary, 62 and 59, want to move to a newly constructed home in an area that’s ideal for retirees. The problem is that home values are close to double in the new community compared to where they live currently. With a reverse mortgage for purchase, James and Mary can make their move and never have to make monthly mortgage payments again (must pay taxes, insurance and home maintenance fees).
$600,000 HOME VALUE
$800,000 HOME VALUE
JAMES AND MARY COULD SELL THEIR HOUSE FOR $600,000 AND PURCHASE A NEWLY CONSTRUCTED HOME FOR $800,000.
House and story are for illustration purposes only. House may not be available for purchase.
Planning for a Legacy
Cindy, 62, is selling her current home that is owned free and clear. She wants a home of a similar value closer to her grandchildren, but she also wants to set up an annuity for her grandchildren to help pay for college. A reverse mortgage can allow her to purchase the home she wants and have plenty of money left over from the sale of her current house.
House and story are for illustration purposes only. House may not be available for purchase.
$800,000 HOME VALUE
Cindy could live in her current $400,000 home further away from her grandchildren.
$650,000 HOME VALUE
Or she could downsize to a $375,000 home for $230,000 down that is closer to her grandchildren.