Reverse Mortgage Home Purchase
Home Purchase with a Reverse Mortgage is available almost nationwide…
The Federal Housing Administration early this year approved such a deal as a form of reverse mortgage for home buyers who are 62 or older.
But in Texas, the only thing anyone can do is imagine. The home-equity-for-purchase deal is available in 49 states, but not Texas.
Here’s an example: A homeowner who is 62 or older can sell a $100,000 house and use $40,000 of the sale to buy another $100,000 house. The senior then receives a $60,000 loan from a reverse mortgage lender.
The loan accrues interest year by year until the homeowner sells the house or dies, at which time the heirs sell the house. When the house is purchased, the proceeds repay the loan. The seller receives any money left over. If the house has depreciated in value, and the sale does not fully repay the loan, the seller owes nothing.
Reverse mortgage loan interest rates are similar to mortgage interest rates. Some rates are below 5 percent now.
As in reverse mortgages, closing costs and fees must be paid when taking out a home-equity-for-purchase loan. Homeowners are required to have homeowners insurance coverage and to pay property taxes. Homeowners have titles to the house, with loan liens attached, just like a regular mortgage.
