Reverse Mortgages

We are concerned about our options when it comes time to buying another house.

Dear Lesslie,

My husband and I are both 68 years old and retired.   Our current home is too big for us at this point in our lives. We would like to downsize and sell our house which has a current market value of about $600,000 and we still owe about $125,000. We are concerned about our options when it comes time to buy another house considering how difficult it is currently to qualify on our retirement income. We could use the cash out of our home to pay cash for another home, but are there any other options for us?  We do not really want to tie up all of our cash in the new house as we would prefer to have access to it for ongoing living expenses.  We have heard that you can now use a Reverse Mortgage to actually purchase a home.  Would that be a good option for us to consider? – J. Garcia

Dear J. Garcia,

What you are asking about is the new Purchase Reverse Mortgage program recently introduced and insured by HUD/FHA. This would be an excellent option for you! After you sell your current home, you will have approximately $450,000 in remaining cash. Instead of using most or all of that money to pay cash for your next home, consider how the Purchase Reverse mortgage could benefit you. Based on your ages you would qualify for a benefit amount or loan amount from the reverse mortgage. You could buy a $450,000 home with a down payment from you of $196,907; the reverse mortgage loan proceeds would pay the balance of the purchase price of $253,093. You would be in your new home without having to make any monthly payments for as long as either of you live there! There is no income or credit scores to qualify for this program. You would still have remaining cash from the sale of your home of over $250,000 for future living expenses or investment. Your only requirement is to pay real estate taxes, insurance and HOA association dues if applicable.

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