Reverse Mortgages

Reverse Mortgage for Purchase

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HECM for Purchase FAQs

1.  What is HECM for Purchase?

HECM for Purchase is the FHA-insured program that allows seniors, age 62 or older, to purchase a new principal residence using loan proceeds from the reverse mortgage.

2.  What is the purpose of the program?

The HECM for Purchase was designed to allow seniors to purchase a new prinicpal residence and obtain a reverse mortgage within a single transaction.  It enables seniors to relocate without having to use all of their available cash.  They can use part of their cash and obtain a HECM for Purchase to cover the remaining purchase price.   

3.  How does the process work?

Once you have decided to use a HECM for Purchase to finance your new home you should sign up for reverse mortgage counseling with a HUD-approved cousnelor.  Once you receive your counseling certificate you should inform your real estate agent of your intent to use reverse mortgage financing as they will need to take certain steps to insure a smooth close.  We will take your loan application and open escrow once you have an accepted offer and purchase agreement.  Working closely with your agent we will order an appraisal for your new home and get the loan processed as quickly as possible.  Once the loan is closed you must occupy the property within 60 days.

4.  What types of property are eligible?

Existing one to four unit properties including FHA approved condominiums and some manufactured homes (built after June 15, 1976 that conform to the Manufactured Home Construction Safety Standards, as evidenced by affixed certification label).  Construction must be complete and a Certificate of Occupancy must have been issued. 

5.  What properties are ineligible?

Cooperative units, newly constructed residences where a Certifcate of Occupancy has not been issued, boarding houses, bed and breakfast establishments, manufactured homes built before June 15, 1976 and those that don't meet standards mentioned in #4.

6.  Where can my down payment funds come from?

You may use your own money or money obtained from the sale of assets.   Some gift funds are acceptable.  No credit card advances, loans, or incentives from builders or any other party.

7.  Is Seller financing allowed?

No.  All liens must be satisfied at the close of escrow of the transaction.

8.  What concessions are allowed?

No seller concessions are allowed.  No exceptions.  No builder incentives, personal property, loan discount points, or interest rate buydowns.

9.  Is rentback/leaseback possible?

No.  As mentioned above, the HECM borrower has 60 days to occupy the home. 

10.  Under what conditions may I cancel the purchae transaction?

You may cancel the purchase transaction at any time prior to the date of closing.   All parties must be informed in writing of the cancellation.  Earnest money may or may not be refundable dependent on the terms in the purchase agreement.