Using a reverse mortgage to buy a home remains one of the white whales of the industry: Long touted as a potential way to boost loan originations and home sales alike, uptake has never quite met the lofty expectations for the product.
But that doesn’t mean that individuals — as well as isolated markets — haven’t seen success with the Home Equity Conversion Mortgage for Purchase program, and a recent webinar aimed at real estate professionals highlighted some of the potential upsides.
“You can be their hero, creating a new homeownership opportunity where they didn’t think there was any,” Christina Harmes, assistant director of C2 Reverse Mortgage in San Diego, said during the call, hosted as part of the National Reverse Mortgage Lenders Association Reverse Mortgage Education Week.
Harmes noted that while millennials and their homebuying habits — or lack thereof — tend to dominate the national conversation surrounding real estate, people over the age of 60 account for about a quarter of all buyers.
“While that’s true, millennials are a big part of the population making up a lot of homebuyers — but don’t forget about the boomers,” she said. “Boomers make up 75 million people in America, and 80% of them are already homeowners.”
And unlike their younger counterparts, older homebuyers come with their own distinctive advantage when it comes to the standpoint of Realtors.
“You’re not only going to get a purchase — you’re going to get the sale of their [existing] home,” Harmes said.
She applied that logic to a so-called grey divorce, in which an older couple decides to end a marriage and get rid of the family home due to the potential bad memories associated with the property. By being familiar with the H4P transaction, Harmes noted, a real estate professional can help both spouses land on their feet in a new property that they may have not been able to afford otherwise — while also goosing the agent’s business.
“You’ve become your own hero,” she said. “You’ve not just gotten the listing, but you created two buyers out of that as well.”
Chris Bruser, a HECM for Purchase specialist with Retirement Funding Solutions in the Tampa/St. Petersburg, Fla. area, emphasized that the transactions are “distinctly different” from a traditional reverse mortgage, targeting a different potential user than a regular HECM.
“This option, [buyers] are going to want to know about, because the HECM for Purchase allows them to pay a fraction of the full purchase price of that home,” he said.
The question-and-answer portion of the webinar revealed some lingering confusion about the products, with one participant asking if the program was available in all 50 states, and others unsure of where to find local HECM for Purchase specialists. But Harmes and the other participants continued to hammer home the point that for a real estate agent, the program could potentially turn prospective buyers into paying clients.
Harmes gave the example of an older couple that may not have been able to receive enough proceeds from the sale of their home to buy the next-step property of their dreams — a particular concern in hot markets like San Diego, where even modest properties carry hefty price tags.
She encouraged listeners to reach out to recent leads who may have fallen into that category and offer the HECM for Purchase as an option if they’re over age 62.
“Suddenly, they can buy again,” she said.
Check out the full webinar recording at Active Rain University, an online educational resource for real estate agents.
Written by Alex Spanko