Did you know you can use a reverse mortgage to purchase a home? The American Recovery and Reinvestment Act of 2009 (The Stimulus Package) includes a feature for seniors age 62 and over: the availability of reverse mortgages on home purchase transactions.
An example is Meghan who recently sold her home for $600,000, netting approximately $515,000. She had originally wanted to purchase a place for $450,000, which would leave her a cash reserve of $65,000. However, what she really liked cost $550,000. She is purchasing the property for $550,000 with $300,000 cash and a $250,000 reverse mortgage. She is very excited because this will leave her with $215,000 in cash reserves. Yet, because it is a reverse mortgage she will not have to make any payments until her home is sold or she no longer uses it as her primary residence.
As an extra bonus for Meghan, because her purchase price of $550,000 is less than her sales price of $600,000, she will be able to transfer her property taxes to her new home. She had lived in her home for over 30 years so her property taxes are quite low.
If you know of anyone who might be in this situation, please suggest that they consult their tax advisor and talk to a Senior Equity Reverse Mortgage specialist.
Carla Griffin, Broker, B & A Realtors