How to buy a home with a reverse mortgage

Buying a home with a reverse mortgage is easy.

Wondering what a reverse mortgage is, and whether it can be used in the purchase of a new home? Absolutely it can , in a process called a Home Equity Conversion Mortgage Purchase or HP4 HECM. An existing home or new construction home is bought at the same time a reverse mortgage is taken, and the transaction is rolled into one.

It’s an option for homebuyers who, either to be closer to family, to downsize, or move to a home that better meets their needs—a single story home, for example- without draining all your cash reserves.

Watch this short video for more information.

The Home Equity Conversion Mortgage (HECM) for purchase is also known as a “HP4 reverse mortgage.” Read more here.

A HECM is similar to a home equity loan, except that the loan has very flexible payment options.  Just make any payment you wish as the loan does NOT have to be repaid to the lender until the home is sold or passed on to heirs. If you want to pay the loan down, then pay any amount you want exceeding the interest and mortgage insurance premium.  If you want to keep the balance from rising, pay the interest and mortgage insurance amount.  The loan becomes due and payable if the borrower does not meet the loan obligations, including failure to occupy the property, maintain it, or pay taxes and insurance.
HP4 HECM features are:
•Homeowners retain full ownership of the property.
•There are no monthly mortgage payments.
•The HECM is a non-recourse loan, so borrowers will never owe more than the value of the home.
•The maximum claim amount is $636,150, or the appraised value, whichever is lower.
•The borrower chooses from multiple payment options including No Monthly Mortgage Payment.  Taxes, HOA, and Insurance payments are required by borrower.

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Richard Woodward, NMLS 217454

Your Local, Direct, 5 Star Rated Mortgage Lender, Specialty Lending Manager

Office:  (214) 945-1066

Service First Mortgage  NMLS 166487

6800 Weiskopf Ave #200, McKinney, TX 75070


Licensed by the Texas Department of Savings and Mortgage Lending (SML) Mortgage Banker Registration. Service First Mortgage is an Equal Housing Lender. This is not an offer of credit or commitment to lend. Loans are subject to buyer and property qualification. Rates and fees are subject to change without notice. The views expressed on this site are those of the individual author and do not necessarily reflect the positions, strategies or opinions of Service First Mortgage or its affiliates.