How To Buy A Home Using A Reverse Mortgage
While a large percentage of Americans have held a mortgage at some point during their lifetime, very few have a clue when it comes to how to buy a home using a reverse mortgage. A reverse mortgage is a relatively new idea in the world of finance, helping more and more older Americans deal with the question of how to buy a home. People are living longer, and many spend a third of their life in retirement, despite the fact that an ailing economy and failing Social Security system is simply not prepared for that. More than ever, retirement is simply a new chapter in life, and many older people want to know how to buy a home that better suits their needs without spending the rest of their natural lives making mortgage payments. A reverse mortgage is the answer, and here's what you need to know in order to determine whether or not a reverse mortgage is a viable option for you.
- Determine whether or not you qualify. In order to qualify for a reverse mortgage, applicants must be at least 62 years of age and have the financial means to cover the down payment and closing costs. In addition, you must be able to prove that you have either income or savings that will allow you to keep current on property taxes and insurance. You can't have any judgments or liens against you, and must not be delinquent on any federal taxes. If you meet all these criteria, you may be able to buy a home using a reverse mortgage.
- Find a HUD-approved lender. In order to buy a home using a reverse mortgage, you must go through a lender that's approved by HUD. A list of lenders is available on the HUD website, but because it's a new program, you may find the lender you normally bank with will not be able to help you obtain a reverse mortgage.
- Do your research and shop around. It's best to read up on reverse mortgage rules and regulations, and contact HUD with any questions regarding how to buy a home using a reverse mortgage. Don't agree to work with any lender who is overly aggressive, or unwilling to thoroughly answer your questions.
- Selling vs. renting. Once you decide to buy a home using a reverse mortgage, you'll have to determine the best way to handle your old property. Some people choose to rent out their property to keep extra income coming in, while retaining ownership of the home so that the home may be eventually passed on to heirs. Others decide to sell their old home to allow more financial freedom and less obligation. Whatever you choose to do, keep in mind that this process won't be completed overnight, and it may take time to sell or rent your home.
- Find your new home. Find the new home that best suits your needs. According to HUD rules, it must be a single-family unit, condominium, or a unit within a subdivision, so you can't use the reverse mortgage program to buy an apartment building and rent out the space while living in your own home. However, most homes qualify, so you're finally able to live closer to your family, in the climate you've always wanted, or in a house that's simply more manageable.
A reverse mortgage is a wonderful way to begin a new chapter of your life in the home you've always wanted, without sacrificing your financial independence and stability, or being encumbered with a 30-year mortgage at the age of 62. While it will take some research, time, and planning, having the option available to buy a home using a reverse mortgage opens up countless windows of opportunity for retirement-age Americans.