How to Use a HECM for purchase to Buy a Home
Another common scenario is seniors who want to move to a new house but cannot afford it. An example is a senior who lives in a two-story house which has a value of about $350,000. They want to move into a patio home. Patio homes are a great option for seniors. Patio homes are one story, have flat lots, and no maintenance. The problem is many patio homes cost over $600,000. How can a senior afford that? A HECM for purchase can help.
Benefits of this product
Like a normal HECM, a HECM for purchase does not require the borrower to make mortgage payments. This product generally requires between 29-63% down, but many seniors use the equity from their last home to cover a majority to all of this. After this, it works just like a normal HECM with no monthly payments required.
There are more benefits beyond not having to pay your mortgage statement monthly too. A HECM for purchase gives the senior a lot more borrowing power than they originally had. As previously stated, a HECM for purchase requires anywhere from 29-63% down depending on the borrowers age. Using a percentage of 45%, for a borrower to purchase a $600,000 home, they would only need to net $270,000 from the sale of their previous home. Mortgage payments are not required as well.
Reminder: All these numbers are just examples and every situation is different.