Retirement is viewed as a chance to make the most of your free time, exploring interests, traveling, and more. For many people, that often includes moving to a new home, either in a new location or to a smaller property that doesn’t require the same maintenance and upkeep of a larger home. A Ladera retirement community is ideal because it includes outdoor maintenance, while also providing a wealth of onsite events and activities to help you enjoy every moment of your retirement. Still, purchasing a new home means money and possible mortgage payments at a time when you don’t want to tie up your funds. This is why the FHA HECM Purchase Program may be of interest to potential retirees.
The idea of purchasing a new home when you reach retirement is great in theory, but it’s not as attractive when it comes to your financial plan. Now is not the time that you want to be making monthly mortgage payments for decades to come. Paying cash to avoid a mortgage also has its drawbacks, as now a large chunk of your money is tied up in the home and not readily available. This is where the Federal Housing Administration (FHA) Home Equity Conversion Mortgage (HECM) for Purchase Loan may be the ideal solution. If you are 62 or older, you could qualify for this reverse mortgage, leaving more of your money free to enable you to fully enjoy your retirement.
The HECM is an insured home loan that enables those over 62 to use the equity from the sale of a previous home or asset (or savings) to buy their next primary home in one transaction. The home you purchase must be your primary residence, but as long as you qualify for the loan and maintain the property according to FHA standards and meet the loan obligations, you don’t have to worry about mortgage payments and you will maintain the title of your home for as long as the home is your primary residence.
The HECM increases your purchasing power, but it also gives you the option to free up more of your money. The amount of the loan is based on the age of the youngest titleholder, current interest rates and the lesser of the appraised value of the home. Homeowners are still responsible for property taxes and homeowners insurance, but should you sell the home or should your estate sell the home, if the equity in the home is higher than the balance of the loan, the remaining equity belongs to the estate. Even if the home sells for less than is needed to pay off the loan, it is the lender who takes the loss, not the borrower, thus you or your estate are not liable financially to make up the difference.
There are many factors to consider before taking on this kind of loan and it is important to understand the process. Fortunately, Ladera often holds free home-buying seminars that discuss the FHA HECM Purchase Program in detail. If you’re interested in moving to a Ladera retirement community, contact them to learn more about the program and any upcoming seminars. This could be an ideal way to enjoy the wealth of amenities and beautiful properties at Ladera, without tying up all of your retirement money in a more traditional mortgage.