The Purchase Reverse Mortgage incorporates the tenets of a normal purchase transaction with the benefits of obtaining a Reverse Mortgage. The qualifications for a Purchase Reverse Mortgage are the same as for a regular Reverse Mortgage. The main difference is the buyer is not re-financing the property so the use of equity is much harder. The buyer must be sixty two years of age at the time of the purchase and they must agree to occupy and maintain the residence. Since a Reverse Mortgage lender is not going to advance much more than fifty percent of the appraised value of the property, the buyer is going to have to make up the difference between the loan and the purchase price, plus closing costs, with money out of his or her pocket. With a Purchase Reverse Mortgage, the buyer can not have any secondary financing either from a bank or from private sources. The Reverse Mortgage program does not allow any other liens on the property.
Getting it started
When the buyer and seller agree to the purchase terms, an appraisal will be completed. Using the buyer’s age at the time and the appraised value, the lender will determine the amount of the Purchase Reverse Mortgage. Since a Reverse Mortgage requires no credit requirements, the borrower’s age and the appraisal are the two key elements to extending the loan offer.
Finishing it up
Closing costs usually amount to no more six percent of the loan amount and they can be shared by the buyer and seller. With the cash in hand to make the purchase, the lender will set up a closing which is identical to a closing for a conforming loan transaction. The main advantage to using a Purchase Reverse Mortgage is once the transaction is completed, the buyer has no mortgage payment. He or she just must maintain the residence, live there and keep current the insurance and tax payments. So to help you with the entire process, you may also seek help from Aurora mortgage broker.