With long-awaited program changes potentially expanding the market for using reverse mortgages to purchase homes, the major industry trade group released a new educational resource aimed at real estate agents.
The National Reverse Mortgage Lenders Association unveiled “Using a Reverse Mortgage to Buy a Home,” a “toolkit” with information about the Home Equity Conversion Mortgage for Purchase program, last week. The 10-page digital pamphlet provides basic information about how potential borrowers can qualify to use a HECM to buy a new home, as well as which types of properties are eligible.
“Because awareness of the HECM for Purchase is still relatively low among homebuyers and real estate agents, there’s a great opportunity to gain a competitive advantage by learning how to educate your clients about this financing option,” the pamphlet reads.
Long considered a “sleeping giant” in the industry, the HECM for Purchase received a major boost from the Federal Housing Administration earlier this year: Applicants no longer have to wait for a certificate of occupancy to apply for an H4P on a new home, and lenders can also receive applications before the completion of housing counseling.
This has prompted many in the industry to predict an uptick in demand, as the occupancy barrier had been viewed as a significant impediment to growth in the sector: According to NRMLA’s new educational materials, less than 1% of homebuyers aged 62 and older have elected to use the HECM for Purchase.
For instance, 1st Reverse Mortgage USA — which already generates about 20% of its business from H4Ps — plans a “full-court press of education” about the transactions aimed at real estate professionals, as vice president Dan Harder told RMD back in August.
“When a buyer uses HECM for Purchase, they have more available funds to afford the home they really want in the location they desire, and they’re able to maintain greater financial control,” NRMLA’s pamphlet reads. “This can bring new opportunity for you to sell more homes to an expanding market of homebuyers.”
Read NRMLA’s full H4P toolkit on the organization’s website.
Written by Alex Spanko