How can you move, buy a new home, and keep your same payment... even if you don't have one?
Let's dive in
-You have to be 62 years old or older, or married to someone who is
-You will need a large down payment (see chart below)
Example of Investment Requirement
If you can put that much down, then the remaining amount will be financed with a Home Equity Conversion Mortgage, or HECM for short.
What is a HECM? It's a mortgage that doesn't require any monthly payments. It allows all interest to be deferred, like a student loan, until you exit the property by moving or selling. You are allowed to make payments like any other mortgage if you choose to, but you're not required to. A HECM comes with a fixed rate comparable to regular mortgages.
If you do choose to defer the interest and never make a payment, which is OK to do, it's going to increase the balance of the mortgage. What happens if your balance increases in excess of the house value? It's a non-recourse loan. This means the loan cannot pursue the homeowner for deficiency in case value and amount owed were upside down.
Again, you can make payments if you'd like, but you don't have to. Either way, the rates are similar to current normal mortgage 30 year fixed rates.
So if you have the down payment and are thinking about moving, why wouldn't you choose a HECM mortgage? Buy the home you want while preserving more of your Savings and Investments with the HECM loan.
This material has not been reviewed, approved or issued by HUD, FHA or any government agency. The company is not affiliated with, or acting on behalf of or at the direction of HUD/FHA or any other governmental agency.
*Actual down payment amounts my vary based on interest rate, borrower age, and other factors. This range assumes closing costs will be financed into the loan. Borrower is responsible for paying property taxes, homeowners insurance, any association fees, and maintaining the home as part of their loan obligations.
Please Note: the information in this flyer is based on an FHA HECM (Federal Housing Administration Home Equity Conversion Mortgage) mortgage product, which is a type of mortgage loan. There are fees associated with this loan as well as compounding interest. The loan is not a government benefit and must be repaid. There is no guarantee of financial security, and the consumer is responsible to pay the property taxes, homeowners insurance, and property maintenance fees independent of the loan, which can be a significant cost. The consumer faces a risk of foreclosure if they do not meet these obligations. For more information about the FHA HECM reverse mortgage product visit http://portal.hud.gov/hudportal/HUD?src+program_offices/housing/sfh/hecm/hecmabout