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HECM for Purchase Seminar

A Little-Known Program to Buy Your Next Home With No Monthly Mortgage Payments!*

McKee Homes has been offering a live HECM for Purchase Program Seminar each month at our Evergreen at Flowers Plantation community model home. This seminar will be continued as an online webinar starting April 7, 2020 at 9:30 AM every Tuesday and Saturday.

Register by calling (910) 672-7296 or emailing sales@mckeehomesnc.com

About the H4P Seminar

Guest Speaker: Ron Heath, Home Equity Retirement & HECM for Purchase Specialist at Mutual of Omaha Mortgage.

What You’ll Learn

  • What the HECM for Purchase (H4P) Program is
  • How to Qualify for the H4P Program
  • What Types of Property can be purchased using the H4P Program
  • How to significantly increase your home purchasing power
  • Why paying cash for your next home may jeopardize your retirement plan
  • Frequently Asked Questions

Advantages of the HECM for Purchase Program

  • You can purchase a $350,000 home for around $220,000 and never have a monthly mortgage payment, if you or your spouse are 62 years old!
  • A significant portion of your nest-egg is preserved by not having to go all in with a cash purchase. Your monthly cash flow is essentially freed up by not having a monthly mortgage payment.
  • If you use the H4P Program to purchase a home and decide to move in 10 years. When you sell your home, you’ll receive 100% of the net proceeds after paying off the loan balance at the time of sale, which is exactly how a traditional mortgage works.
  • You can live in your home until the last borrower vacates as long as loan terms are met. The borrower/s must occupy the home as their primary residence and remain current on property taxes, homeowner’s insurance, the costs of home maintenance, and any HOA fees.

More Information

For more information, and to download the HECM for Purchase Home Buyers Guide, please visit our McKee Homes HECM for Purchase Program article.

*Borrower must occupy home as primary residence and remain current on property taxes, homeowner’s insurance, the costs of home maintenance, and any HOA fees.

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HECM for Purchase Program

As more and more Baby Boomers reach retirement age, there is an increasing demand for single-story homes with finance options such as the HECM for Purchase Program (H4P). With the H4P Program, you can purchase a $350,000 home for around $220,000 and never have a monthly mortgage payment, if you or your spouse are 62 years old! If one of you is 70, you can buy that home for around $200,000.

Many retirees want a smaller single-story home close to family and friends and amenities like walking paths and a community clubhouse. In order to secure the home of their dreams, retirees would traditionally pay cash from the sale of another home or secure a traditional mortgage. The drawback of these two options is the amount of money required, which can put stress on available funds needed for paying bills or emergencies.

Cash Flow Remedies

If you pay cash for your new home or have a traditional mortgage and then later need to solve cash flow issues, your options include securing a traditional line of credit or a Home Equity Conversion Mortgage (HECM) refinance. However, the line of credit option requires making additional monthly payments and both options create another round of closing costs.

The H4P Program fixes these problems with a single transaction, meaning a significant portion of your nest-egg is preserved by not having to go all in with a cash purchase. Your monthly cash flow is essentially freed up by not having a monthly mortgage payment. To date, the H4P Program is the only mortgage that uses age as a preliminary qualifying factor. So, if you’re at least 62 and can qualify for the HECM for Purchase Program, this is one time it pays to be older. Smile and celebrate your retirement years!

The H4P Program is unlike a traditional home mortgage in that monthly payments are deferred and the loan balance increases over time. However, there is a consumer safeguard built into the program. Because the loan is insured by the FHA (Federal Housing Administration), neither you nor your heirs have any personal liability for the repayment of the debt.

Selling Your Home

If you use the H4P Program to purchase your dream home and decide to move in 10 years. When you sell your home, you’ll receive 100% of the net proceeds after paying off the loan balance at the time of sale, which is exactly how a traditional mortgage works. So the primary benefit to you is that you don’t tie up all your savings by paying cash and you increase your monthly cash flow by not having a monthly mortgage payment. Also, if your home has increased in value greater than the mortgage balance when you sell it, you participate in the equity growth.

But what happens if you sell your home during a market downturn and the loan balance is greater than the current market value of your home? In a traditional mortgage scenario you or your estate would be forced to sell the home at a loss and cover the negative balance owed. The FHA non-recourse clause governing the H4P Program states that the home is the only asset securing the loan. That means neither you nor your estate have any personal liability for a deficient loan balance if your home is sold for a loss.

Simply put, it’s not your problem and no one is coming after your estate for a settlement. In addition, if your heirs wanted to retain ownership of the home after your death, they can do so by paying off the lesser of the reverse mortgage balance or 95% of the appraised value of the home.

If you end up in a nursing home, or you pass away, then it’s time for your heirs to get the house appraised and see if there is enough equity remaining for them to realize a profit from the sale. If not, they can simply sign the deed over to the lender and not have to deal with it.

With the H4P Program, you can live in your home until the last borrower vacates as long as loan terms are met. The borrower/s must occupy the home as their primary residence and remain current on property taxes, homeowner’s insurance, the costs of home maintenance, and any HOA fees.

More Information

Use the resources below to learn more about the details of the HECM for Purchase Program, including qualifying rules, down payment, disqualifying factors, personal liability, homeowner responsibilities, consumer safeguards and more.

Download the 2019 HECM for Purchase Home Buyers Guide

HECM for Purchase Home Buyers Guide

By the time you finish reading this guide you will know the following:

    • How to increase your home purchasing power
  • How to eliminate monthly mortgage payments (You remain responsible for property taxes, homeowner’s insurance, home maintenance, and any HOA fees)
  • How to get the house you really want and preserve your life savings
  • How to qualify for the HECM for Purchase Program
  • Answers to frequently asked questions

Disclaimer

Due to the unpredictability of the housing market, you are encouraged to consult a financial planner prior to making a decision that could affect your retirement plan. The reverse mortgage is not a time-sensitive product.

Questions?

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What Is A HECM Loan?

If you are close to retirement age and have been looking into downsizing your home or various refinance options to increase financial stability, you may have come across something called a HECM loan. So, exactly what is a HECM loan?

The HECM (Home Equity Conversion Mortgage) for Purchase loan option is for homebuyers who are age 62 or older. HECM is a type of Reverse Mortgage that allows the homebuyer to purchase their dream home without making any monthly payments. Depending on the buyer’s age, they will need to provide a down payment of anywhere from 35-50% of the purchase price and never make another mortgage payment for as long as they live in the home. There is also a refinancing option for those who wish to use the HECM loan program but want to stay in their current home.

Some advantages of a HECM loan over a traditional 30 year mortgage or paying cash are:

  • Compared to traditional financing, you can increase your income each month by not having to make a mortgage payment.
  • Under many circumstances, you don’t have to wait until your current home sells to use the program.
  • Purchase your next home without depleting a large portion of your life savings.
  • Interest gets added to loan balance.
  • Closing costs are included in the mortgage.
  • The HECM is the only program that if the home ever sells for less than the loan balance, neither the borrower nor the estate is responsible for paying the difference.
  • Use money saved from no monthly mortgage payments to invest, travel, spend on family, or any unexpected expenses.
  • Similar to paying cash, you are only responsible for paying property taxes, insurance, and any homeowner association fees, as well as maintain the property. However, with paying cash, you would put more money upfront for the same benefits as the HECM for Purchase.

What are the qualifications for a HECM loan?

  • You or your spouse must be 62 or older.
  • The home you are purchasing must be your primary residence.
  • Per HUD guidelines, down payment funds must come from your verified assets, including, but not limited to traditional bank accounts, investments, 401K, CD’s, money market account, money made from sale of current home, or a gift.

What types of homes are eligible for the HECM for Purchase program?

  • Single Family Home (existing or new construction)
  • Condo
  • PUD (Planned Unit Development)

What are the homeowner responsibilities?

There are only a few items you will need to take care of once you move into your new home after closing. These include:

  • Property Taxes
  • Homeowners Insurance
  • Flood Insurance (if applicable)
  • Homeowners Association Dues (if applicable)
  • General maintenance of the home

Other advantages of the HECM for Purchase program include:

  • Asset protection
  • Independent HUD counseling
  • Title to home stays in borrower’s name
  • No pre-payment penalty
  • No maturity date
  • You can stay in your home until the last borrower vacates

Each person’s financial and life situations are different so it’s a good idea to investigate all your options before choosing your next mortgage. If you are interested in learning more about the HECM for Purchase program, ask your lender if they offer HECM loans and have them go over the advantages and disadvantages of HECM versus other types of mortgages with you.

If you are interested in using the HECM for Purchase program to purchase a McKee home, please contact us at 910-672-7296 for more information or to set up an appointment to go over the program, answer any question you may have and find out what you can expect during the entire loan process.

If you are thinking about down-sizing and looking for a single-story or ranch-style home for ‘aging in place’, please visit our single story homes web page for floor plan and neighborhood information.