Issue 8.12
Too good to be true? If you’re 62 and older and you’re still making a mortgage payment on your home, than you can stop! Today 80% of all our senior client’s that are new homeowner’s and are over 62 years of age are purchasing their homes with the FHA insured Senior HECM loan.
Likewise our senior client’s can utilize this loan for the home that they are currently in, as it is an invaluable tool in eliminating your existing mortgage payments for life.
We see the billboards and magazine articles from the larger retirement communities in St. George, SunRiver and Arizona that say, “Buy this $250,000 dollar home for$ 100,000 and have no mortgage payments for life.” “What kind of crazy loan or scam is that?”
The magazine articles and the radio ads are referring to the FHA insured HECM mortgage. The truth is – that the loan is simply a government FHA insured loan. Nothing crazy, but certainly an exciting loan program for seniors that since January of this year, about 80% of our senior client’s, that are purchasing homes, are using the new FHA insured HECM Reverse Purchase. If you think about it 80% of all home sales to seniors is a big number, so why are senior client’s opting to utilize this loan versus conventional financing or paying cash for their home?
The same loan applies to your existing home as well at age 62 or older. We don’t need to buy a new home to utilize this loan. For example, let’s say that you own your existing home that has a $250,000 value, but you still owe $150,000 and you will be making mortgage payments for the next 20 plus years or perhaps the rest of our lives. I am not sure any of these mortgage payments will benefit you directly as you have to use your retirement and savings to make mortgage payments in a home that you may not ever pay off.
In these cases, like my father here in St. George, they simply can convert their current mortgage into a HECM mortgage and eliminate their existing mortgage payment for the rest of you and your spouse’s life. Thus truly the majority of HECM mortgages that we see are either home purchases or current homeowner’s that are simply looking to get out of their current mortgage payment. These senior loans give us a safety cushion and a reserve that allows us to retire more comfortably during our retirement years.
Whether the Senior HECM mortgage is right for you is a big question. Consider all your options. Each situation and circumstances require careful considerations. However, as with 80% of new homeowner’s today, the HECM reverse mortgage should be one of your main options when looking at your overall financial strategy.
Brandon Hansen, is a Senior Mortgage Banker /Registered Investment Advisor Representative Cherry Creek Mortgage / Investment Advisors International. www.seniorbankingtoday.com /435 525 2266 / 435 773 4164.