HECM for Purchase in San Jose, CA - How Does it Work?

You’ve likely heard of the reverse mortgage or Home Equity Conversion Mortgage in San Jose, CA before. You know that homeowners ages 62 and older can tap into their home’s equity and age in place and don’t owe any payments.


But what about the HECM for purchase? Most people don’t realize it’s an option and a good one too.


Here’s everything you must know.


What is an HECM for Purchase?


An HECM for purchase allows San Jose residents ages 62 years and older to use the reverse mortgage program to buy a principal residence. It’s similar to the standard reverse mortgage, but instead of refinancing your existing home, you buy a new home.


You’ll need equity in the home, which most people get from selling their existing home, and you must meet the age guidelines too.


How Does it Work?


Like the traditional reverse mortgage, borrowers aren’t required to make any mortgage payments. You are welcome to make them if you can, of course, and can make them in any increment.


If you qualify, you make a down payment and the rest of the purchase price is financed. This leaves buyers with more liquid assets on hand so they can use the funds to supplement their retirement income rather than putting all the money into a house.


Just like a standard reverse mortgage, if you leave the home or pass away, the loan becomes due and payable.


How do you Qualify?


To qualify for an HECM purchase in San Jose, CA you must meet the following:


  • At least one borrower must be over age 62
  • The home you purchase must be your primary residence year-round
  • You must meet the down payment requirements
  • You must undergo reverse mortgage counseling


The down payment requirements are the most important aspect. You’ll need 45% - 62% down depending on your age (the older you are the less money you need down). The rest of the money is financed by the loan.


You must also prove you can financially afford the home’s upkeep, real estate taxes, homeowner’s insurance, and HOA dues if necessary.


What Safeguards are in Place?


The HECM for purchase has a non-recourse stipulation too. If your loan accumulates to more than the property’s value, you’ll only owe the value and not the full amount due. There’s also protection if your co-borrower is under the age of 62. If you pass away, the co-borrower can stay in the property as long as the co-borrower can prove he/she can afford all housing costs related to the property.


Final Thoughts


If you’re thinking about downsizing during retirement, an HECM purchase may be a perfect choice. You can free up your liquid assets allowing you to afford the daily cost of living during retirement and buy the house you want.


Are you ready to learn more about how the HEMC for purchase works and how it is beneficial during your retirement? Get a copy of my free book by visiting www.reversemorgagelive.com. This is a limited time offer so act fast!

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