Using a home equity conversion mortgage (HECM) for purchase, a St. Louis couple was able to buy their “dream home” in Florida, according to a recent article in The Huffington Post.
“We owned our home in St. Louis area for quite some time, and we vacationed in South Florida the last five to six years,” Andy Hollimon says in the article. “We were looking to change locations for retirement and were zeroing in on the geographic region that we preferred.”
Hollimon became aware of the HECM for purchase program by watching an AAG commercial about HECM mortgages.
“This form of reverse mortgage required them to put up only a portion of the purchase price, and the reverse mortgage would cover the rest,” explains The Huffington Post. “They would be responsible for the property taxes, insurance and homeowner’s association dues.”
The move also ended up enabling the couple to retire 10 years sooner than they thought they could, the article says.
Hollimon and his wife, Beatrice, had lived in their three-bedroom, 1,300 square feet St. Louis home since 1979. The value of the home had reached a value of $160,000 before the subprime mortgage crisis.
“The house dipped substantially in value before increasing back up to $115,000 when the housing market recovered,” The Huffington Post says. “The Hollimons had a small home equity loan on the St. Louis home and wouldn’t be able to capture the full amount from the sale.”
Their home in Lake Worth, Fla. measures 2,000 square feet, and was acquired for a price of $275,000. To purchase the home, the Hollimons needed to put up 55% or about $141,000.
“Knowing they would get less than that from the sale of their home in St. Louis, the purchase would mean dipping slightly into their investment portfolio,” The Huffington Post says, noting using the HECM for purchase allowed them to avoid draining their investment portfolio.
“If I would have needed to take a whole lot more in investment income, I wouldn’t have purchased that nice of a home,” Hollimon says. “I only wanted to deplete my investment portfolio to a certain level. I’m a frugal guy, and it broke my heart to do that much.”
Read the article here.
Written by Cassandra Dowell