If you've considered purchasing a new home but don't want the monthly mortgage payments that come along with it, the Reverse Mortgage for Purchase may be for you. Reverse Mortgages are normally used by homeowners 62 and over that are trying to remain in their home (aka "age in place"). Sometimes, the clients we assist are no longer interested in staying in their home. They may be "empty nesters" or maybe they're no longer able to maintain their current property. The Reverse Mortgage for Purchase may be the perfect solution. With the Reverse Mortgage for Purchase, or "R4P", a homeowner 62 and over applies for a loan on the NEW property; not their existing home. The great thing about the R4P is that the amount they qualify for is based on the age of the youngest borrower and there are no monthly principle and interest payments. The difference between the amount they qualify for on the R4P and the purchase price is what they need for down payment. This down payment normally comes from the proceeds of the sale from their existing home. The older they are, the more they qualify for. FHA requires that they live in the home, pay the property taxes and insurance and maintain the condition of the home. Interest is deferred until the end of the loan, which is when the last borrower permanently vacates the home. The house is sold and the loan is paid off. The heirs keep all remaining equity and they are protected by an FHA clause called "non-recourse." This means that they will never be responsible for a shortfall at the end of the loan.
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