Issue 25.13
In just about every senior publication published these days there seems to be advertising referencing home loans with “No payments for life”. This just seems to be too good to be true. Can someone really get a loan on a home and never pay a house payment for the rest of their lives? How could this be?
The answer to the million dollar question is, yes you can! There is obviously much more detail involved but overall the statement is absolutely true as long as the specific loan guidelines are kept in place.
If a qualifying senior couple buys a home as their primary place of residence and uses a HECM loan to complete the purchase transaction, they will not have to make a loan payment ever. It just sounds amazing, no payment forever. Now, once the circumstance changes so do the loan requirements. The loan repayment will begin at any time the owners move away permanently but all parties on the loan must vacate the property before the repayment begins.
It is important to know traveling around in a travel trailer or motor home, staying in a different seasonal home for a few months of the year, spending time in a medical rehabilitation center and serving time away in a temporary service roll (Religious calling) are all allowed under the program without triggering the repayment process. As long one or both of the parties maintain occupancy of the home, regardless of any type of travel or vacation away from the home, the loan will not begin repayment no matter the age of the occupant. The repayment begins when all persons on the loan have vacated the property permanently.
Now, even though no loan payments are due on the HECM loan, the property must be fully insured annually and the local property taxes must be kept paid current. It is important to know if the taxes ever go delinquent it could trigger a repayment.
In summary the HECM loan is a great way to buy a home for a minimum down payment as your primary place of residence and have “no loan payments for life” as long as you maintain the primary residency and there is annual responsibility to pay property taxes and home owners insurance for the home. If you would like more details about your particular situation, I offer education at no cost. Please call 435-767-1022.