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#61 Using a Reverse Mortgage to Buy a New Home


David Garrison
Home Equity Retirement Specialist
NMLS # 1595194
Serving the State of Indiana
p (317) 644-2595 c (765) 516-0130
e [email protected]

2169 East Rutland Lane, Martinsville, IN 46151
Corporate NMLS #1025894

At age 66, now three years into living on your own following your spouse’s passing, you’ve decided that the time has come to sell your home. You’ll be moving to a small town near Evansville, where your daughter and her family live. While the original plan was to wait until spring, when the warmer weather would make packing and moving easier, your daughter has found the perfect home in the perfect location, so you’re beginning the process of listing your
present home for sale. The house in question belongs to acquaintances of your daughter and son-in-law, and is not yet listed, but will be selling for far less than the money you expect to realize from the sale of your own home (both because it is smaller and because it’s not in an urban neighborhood).

You want to act swiftly to make an offer on the home the moment it is put on the market, but are not sure about the financing, or if the timing of the sale of your home will dovetail with when this other home goes on sale. The mortgage on your current home was paid off with your husband’s life insurance proceed, and you would like to avoid mortgage payments in the future.

A reverse mortgage could be your answer. Since you intend to make your new home the primary residence, you can apply for a Home Equity Conversion Mortgage for Purchase (HECM). At the time of closing on your new home, you’ll need cash to pay the difference (approximately half the home’s value) between the HECM and the sales price (plus closing costs), but it sounds as if the sale of your own home will cover that and then some.

Most important, you will not be obligated to make any monthly payments on the HECM for Purchase loan. As far as timing, whether the sale of your present home happens precisely in tandem with the closing on the new home, or a month or two earlier or later, starting the process now can allow time for the HECM to be approved. Then, with all the financial arrangements lined up, you’ll be ready to make your move to southern Indiana suburbia.

“Shifting into reverse” can help you move “forward” with your plans!