A newcomer to the Home Equity Conversion Mortgage or HECM, HUD's version of the reverse mortgage, is the purchase program. With the fixed rate option providing more funds now, this can be a great way to buy a home. For those relocating, the proceeds of the sale of one home can provide the amount needed to put down on a new home. Without having to income or credit qualify. Or having to worry about a monthly payment.
A recent example of a $200,000 home purchase would require a 62 year old to have $78,000 down, a 72 year old to put down $75,000 and an 80 year old would put down $60,000. The trick is the timing. Rates are subject to change and until it is ready to close, the amount needed could vary due to changes in rates. Especially if seniors are downsizing, the sale of one home could allow for the use of the HECM for a reduced down payment from a cash purchase and it preserves some liquid assets that can be used for investments or living expenses.
The nationwide loan limit is $625,000 for the balance of the year. It could revert to $417,000 after the first of the year. So, if you are looking at a high cost area, now would be a good time to make the move.