HeraldNet journalist Tom Kelly writes about the one of the most exciting parts of HERA in Program allows reverse mortgage for a purchase. The new HECM for purchase program becomes active January 1st, 2009 and allows homeowners to use a HECM to purchase a new home.
"The HECM for purchase will give seniors several more options," said Sarah Hulbert, president of Senior Financial Corp,a reverse mortgage lender. "I think one of the key aspects is that they can stay more liquid. They do not have to reinvest all of their funds into their new home before getting the reverse mortgage, freeing up more cash for other uses."
Seniors can use the program to purchase 1-to-4 unit single-family homes, condos, and manufactured homes built after June 15th 1976 that meet HUD’s permanent foundation guidelines.
"I think you will see the typical purchaser for a home equity conversion mortgage will be the move-down buyer — perhaps headed to the sunshine," said former Puget Sound resident Ken Keranen, who now originates reverse mortgages for Seniors Reverse Mortgage in Carlsbad, California.
The only challenge seniors now face in this slow market is finding a willing buyer to purchase their present home so they can "move down" via a reverse mortgage. After all, you have to sell your primary residence before you can buy another one.