Reverse Mortgage for Purchase – Scenarios
Below are just of few hypothetical scenarios illustrating the power of using a reverse mortgage to purchase a home in different circumstances. These scenarios are only examples, and your circumstances may be different, however a reverse mortgage for purchase could help you achieve your retirement home purchasing objectives.
- Mr. and Mrs. Smith wish to downsize
- They sell their current home for $400,000 and pay off their mortgage of $250,000 – leaving $150,000 cash leftover
- Some possible options for Mr. and Mrs. Smith when buying their next home:
- They can buy a $150,000 home for cash and have no monthly mortgage payments
- They can buy a $250,000 home, put $150,000 down and take a traditional forward mortgage for $100,000 with monthly payments.
- They can buy a $250,000 home, put $120,000 down, take a HECM reverse mortgage for $130,000, and have no monthly mortgage payments for as long as they live in the home – AND keep $30,000 in cash in their bank account.
- They can buy a $280,000 home, put $150,000 down, take a HECM reverse mortgage for $130,000, and have no monthly mortgage payments as long as they live in the home.
- *Please Note: It is always recommended that you consult your financial advisor
- Ms. Jones wishes to relocate into a similar home in a new state or retirement location that is higher priced.
- She sells her current free and clear home for $200,000, but similar homes in the new state or retirement location run $300,000 – $350,000.
- Some possible options for Ms. Jones when buying her next home:
- She can buy a $300,000 home for cash by using the proceeds of their sale and $100,000 cash from savings and have no monthly mortgage payments.
- She can buy a $300,000 home, put $200,000 down, and take a traditional forward mortgage for $100,000 with monthly payments.
- She can buy a $300,000 home, put $145,000 down, take a HECM reverse mortgage for $155,000, and have no monthly mortgage payments for as long as she lives in the home – AND keeps $55,000 in cash in their bank account.
- She can buy a $400,000 home, put $200,000 down, take a HECM reverse mortgage for $200,000, and have no monthly mortgage payments for as long as she lives in the home.
- *Please Note: It is always recommended that you consult your financial advisor
- Mr. and Mrs. Johnson wish to purchase a second property such as a vacation home with the intention of eventually retiring, selling their primary home, and moving into the vacation home.
- Their primary home is free and clear and worth $400,000.
- Some possible options for Mr. and Mrs. Johnson when buying their vacation home:
- They can buy a $250,000 home for cash by using cash from savings – no mortgage payments.
- They can buy a $250,000 home, put $150,000 down out of savings, and take a traditional forward mortgage for $100,000 with monthly payments.
- They can buy a $250,000 home for cash by using a HECM reverse mortgage to pull $200,000 from their current home and adding $50,000 from their savings.
- They can buy a $350,000 home, put $150,000 down, and use a HECM reverse mortgage to finance $200,000 from their current home to cover the remainder – No monthly mortgage payments for life.
- With the last two options, when the primary home is later sold, the proceeds can be put into savings or used to pay down the reverse mortgage balance.
- *Please Note: It is always recommended that you consult your financial advisor
*Please Note: The homeowners are responsible for the payment of property taxes, homeowner insurance, and the maintenance of the property.
**The Scenario is being used for illustration purposes only.