Reverse Mortgage Purchase
Many people are unaware of the fact that you can use a reverse mortgage to purchase a home in Oregon. The assumption has always been that the only way a reverse mortgage could be used is to refinance a home to pay off debts and gain access to equity. There are many benefits to using a reverse mortgage to buy a home in Oregon.
If you cannot find the home you want, in the price range you are looking in and you do not want monthly mortgage payments, then you should consider a reverse mortgage. A reverse mortgage can help free you from the limits of the cash you have on hand.
Because the loan amounts on a reverse mortgage are determined by age, it is difficult to say how much higher in home prices you can go above in your current cash price. However, in general, you can expect to come close to doubling your “all cash” price point.
I would highly recommend giving me a call so we can figure out exactly what your cash along with a reverse mortgage can buy you.
Do keep in mind that buying a more expensive house also means your other housing related expenses, taxes and insurance, will most likely be higher. A larger home usually brings with it higher utility bills as well.
Keep More Money In Your Pocket – Instead of paying all cash for a home and tying up all of that cash in equity, you might want to consider using a reverse mortgage to buy the home so you can keep a good portion of that money in the bank.
Save Money In Closing Costs – I have spoken with several people that purchased a home with a traditional mortgage and then called me to do the reverse mortgage a few months after they purchased. There is no reason to purchase a home with a traditional mortgage first and then refinance it into a reverse. You can save yourself thousands of dollars in closing costs if you just use a reverse mortgage to purchase the home in the first place.
The same is true even if you are doing a cash purchase. There is no reason to incur charges and fees from the title and escrow company twice.
How The Reverse Mortgage For Purchase Works
Unlike a reverse mortgage used for a refinance, there are no options for a line of credit or ability to receive monthly payments. You are putting the minimum down in order to retain the cash you already have. However, if you do want a line of credit or monthly payments you can put more money down.
With a reverse mortgage, the principal owed increases every month since you are not making payments. The payments, interest and mortgage insurance, are simply added to the loan balance every month. The equity in your home decreases as payments accrue. You are responsible for paying taxes, insurance and any other regular expenses of homeownership.
*No Monthly Mortgage Payments – There are no payments due until the property is sold, interest is transferred or the mortgagor passes away and there is no eligible spouse to maintain the property as their primary residence. Interest and fees will accrue as long as you continue to live in the house based upon the amount of money you borrow. You must continue to pay taxes, insurance and other costs related to homeownership.