It’s safe to say that many people know that a reverse mortgage is a loan that can be used by a older homeowner who wants to extract the equity in their house. But what many people don’t know is that there is a type of reverse mortgage that can be used to purchasea house. And while it’s not for everyone, it could be a retirement gamechanger for a good number of people.
It’s not uncommon to sell off the family home and downsize or relocate as you reach retirement. According to the National Association of Realtors, older adults comprise 38% of homebuyer market, and most choose some kind of financing. Obviously, paying 100% cash for a new house isn’t realistic for most people, but taking on a mortgage in retirement isn’t exactly ideal.
There’s another option out there: a little-known, barely used variation of the reverse mortgage.
It’s called a Reverse for Purchase or, using the official product name Home Equity Conversion Mortgage, a HECM for Purchase. Continue reading…