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735 Ceramic Place, Suite 220
Westerville, OH 43081
WEINSTEIN MORTGAGE TEAM
“We believe in educating our clients towards the best solution.”
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HECM FOR PURCHASE
A dream loan to purchase your dream home
Make life easier with
no monthly mortgage payments
A Division of NOIC, Inc.
Our goal is to provide education and guidance to ensure that our clients understand the lending process from the first meeting to the closing on their loan. We believe in
providing each client with all of the information they need to make an informed decision on the best solution available to them. We pride ourselves on our honesty, integrity and trust building. We want each client to achieve their goals and come to know us as a friend, not just their lender.
Concord Mortgage Group is a full service mortgage banker with an experienced staff offering expertise in all areas of mortgage lending. Whether you are considering a new home, construction loan, refinance or reverse mortgage, we have the products and services you need and we will work tirelessly to find the best option for you to accommodate your needs and achieve your financing goals.
Senior Loan Officer and Licensed HECM Specialist
Read about our loan programs, get pre-qualified online, and meet our
What is this
How to qualify
for the HECM
Learn how the
How can I
3 Ways to Pay:
FAQs about the
What is this crazy loan?
HECM for Purchase Down Payment Chart
This calculation is based on youngest borrower using HECM Fixed Rate of 4.75% as of March 1, 2016. Adjustable rates are available. Annual loan cost, similar to APR, can range from 2.659% - 9.914%. This table shows the estimated borrower funds needed at closing from utilizing an FHA-insured Home Equity Conversion Mortgage to purchase a home. This information is provided as a guideline and does not reflect the final outcome for any particular homebuyer or property. The actual borrower funds needed at closing are based on current interest rates, current charges associated with the loan, borrower date of birth, the property sales price and standard closing costs. Interest rates and loan fees are subject to change without notice.
No principal or interest payments will be required as long as one borrower occupies the home as their primary residence and adheres to all HUD guidelines of the loan. The cost of any reverse mortgage loan depends upon how long the loan is kept and how much the property appreciates in value. Generally, the effective cost decreases across the life of the loan.
The HECM loan balance becomes due and payable when the last remaining person on the mortgage no longer maintains the property as their principle residence. Some examples of this could be when the last remaining borrower passes away, if you sell the home, or you are no longer using the home as your primary residence. You must also remain current with taxes, insurance, and any homeowner association fees, as well as maintain the property.
Source: Liberty Home Equity Solutions and US Department of Housing and Urban Development The HECM (Home Equity Conversion Mortgage) for Purchase is a loan option for
buyers who are age 62 or older. Commonly known as a Reverse Mortgage, the HECM provides many benefits to homebuyers seeking to live in a home that better fits their needs and have more financial stability. This type of loan offers the ability for you to purchase your dream home and never make another monthly mortgage payment again. So how does that work? By providing a down payment of anywhere from 35 - 50% of the purchase price, you are able to live in the home of your dreams and never make another mortgage payment for as long as you live in the home. Who can benefit the most from the HECM for Purchase loan? ANYONE! (As long as you OR your spouse is 62 or older of course!). The HECM for Purchase loan fits anyone looking to downsize, have less home maintenance, move into a one story home, or increase their monthly income. The list goes on and on! By utilizing the benefits of the HECM for Purchase, many clients find that they are able to purchase a better home that they could only dream about. The HECM for Purchase really is a dream loan to purchase your dream home!
Do you already live in your dream home? Maybe it is the home you have raised your kids in, but the expense of paying a large monthly mortgage payment is worrying you. No problem! The HECM loan also provides the option of REFINANCING your current home. You can take advantage of all the same benefits, including no monthly
mortgage payments for as long as you live in the home.
As we all get older, we want to minimize the risk, burden, and worry for ourselves and surrounding loved ones. The HECM program can help you do all of that with the securities in place that help protect and plan for your future. You will not only be making NO monthly mortgage payments, but you also don’t have to worry about leaving behind debt for your loved ones. Please continue to read on about this dream program.
$300,000 (Purchase Price) + 70 (Age of Youngest Borrower) =
3 Ways to Pay:
Which best fits your needs?
Option 1: Purchase with Cash
When purchasing a home, many people only know about the common ways in which to finance a home: paying cash or qualifying for a fixed rate traditional mortgage loan. If you are paying cash for your next home, you may be depleting your savings. With a traditional fixed rate loan, you will pay a lot in interest over the life of the loan, perhaps unnecessarily.
With the HECM for Purchase program both of these problems are solved. By traditionally putting down 35 - 50% of the purchase price, you keep a good portion of your savings and never make a monthly mortgage payment again.
Of course, there are advantages and disadvantages to each option, which one do you think would be the best for you and your future?
No monthly mortgage payments
Available equity in the event of an emergency
Strong negotiating power when purchasing a home DISADVANTAGES:
Less liquidity, having a mortgage frees up cash you may have otherwise invested in the purchase of a home
Home could lose value and end up being worth less than you paid
Unable to take advantage of tax deductions
Option 2: Traditional Fixed Rate
Less money upfront initially
Principal and interest never change, keeping your monthly mortgage payment the same each month
Able to take advantage of tax deductions DISADVANTAGES:
You have recurring monthly mortgage payments, which can be a burden if income suddenly changes, or you are on a fixed income
Home could lose value and end up being worth less than you paid
Your home won’t be paid off for 30 years (or less, but still a long time!)
Option 3: HECM for Purchase
If you or your spouse is 62 years or older, then the FHA-insured HECM for
Purchase program can help you tailor your mortgage to fit your personal, familial, physical, and lifestyle needs. This financing option saves you money by not having to make a monthly mortgage payment each month. In addition, there are many other added benefits to this program:
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
Do I Qualify for the HECM for
Purchase Loan Program?
You, or your spouse, must be 62 or older. If either you or your spouse is 62 or older, then you may qualify for the HECM for Purchase program. If one of you is 62 and the other one is younger, you can still qualify. The down payment will be based of the age of the youngest person.
Must be used on your primary residence only.Many of our clients wish to purchase a home closer to family in a different state or wish to retire in a different state than they are currently living. That is no problem! We simply need to ensure that your new residence will be your primary residence. Residency can be established during the loan process, or shortly after closing on your HECM loan.
Where can we get our down payment from?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.
And how you can overcome them...
Do you have unpaid federal liens? If you have an unpaid federal government debt such as taxes or liens, the balance will need to be resolved before qualifying for a HECM for Purchase loan. Have you experienced a Foreclosure, Short Sale, or Deed in Lieu? There is a 3 year waiting period required after any of these events occur before you are able to use the HECM for Purchase program. This is not a clock that starts now. For example, if you experienced a foreclosure 2 years ago, you would only have to wait one more year before qualifying for the HECM for Purchase program.
Do you currently have an FHA mortgage? The HECM for Purchase is an FHA government insured mortgage loan. You cannot have two active FHA mortgages at the same time. If you currently have an FHA mortgage on your existing home, and are planning to sell that home, the solution is easy. Once the home is sold, you are released from that FHA loan and are able to take advantage of the HECM for Purchase to finance your new home.
Option 1: Purchase with cash $300,000 down payment No monthly mortgage payment Option 2: 30 Year Fixed Mortgage $60,000 down payment $1146/month payment 4% interest rate
Option 3: HECM for Purchase $138,552 down payment No monthly mortgage payment Option 4: Rent Traditional first months rent deposit - $2,000* $2000/month* *average rent of comparable homes
Period of Time (Years)
Cost of purchasing a $300,000 home over a period of 30 years by using different financing options
HECM* (Total: $138,552) 30 YR FIXED (Total: $472,560) PURCHASE WITH CASH (Total: $300,000) RENT (Total: $722,000)
*Calculation based on youngest borrower age 70, with a purchase price of $300,000, fixed rate of 4.75% and an annual loan cost between 2.659% - 9.914%. The HECM loan balance becomes due when you move out of the home, the last remaining borrower passes away, or you are no longer using the home as your primary residence. You must also remain current with taxes, insurance, and any homeowner association fees.
How does the HECM for
Purchase protect me?
What types of homes
Many types of one to four unit properties are eligible for the HECM for Purchase program. Such properties include single family homes, condos and PUD’s (Planned Unit Development). There are certain requirements regarding each of these property types and all must meet FHA minimum property standards. Some of the highlights for each property type include:
SINGLE FAMILY HOME
Can be an existing home or new construction** CONDO
Condo must be in an FHA approved community
If the community is not FHA approved, steps can be taken to get the community FHA approved
PUD (Planned Unit Development)
Required to own the land and not just the dwelling
Homeowner association dues should be expected and traditionally cover maintenance of common community areas
Must have Certificate of Occupancy (CO) prior to official loan application
Certificate of Occupancy (CO) is issued by the local government agency certifying the structure is compliant and suitable for occupancy.
TYPES OF PROPERTIES INELIGIBLE
There are a few common types of homes that are not eligible for the HECM for Purchase program. Some of these property types include second homes, vacation homes, manufactured homes and rental or investment properties. The property must be your primary residence in order to qualify for the HECM for Purchase program.
The HECM for Purchase program has so many great benefits. You must be wondering, if I am not making a monthly mortgage payment, is there anything I will be responsible for? There are only a few items you will need to take care of once you move into your new home after closing. These include:
Flood Insurance (if applicable)
Homeowners Association Dues (if applicable)
General maintenance of the home
There are so many benefits to using the HECM for Purchase program to buy your next home. Some of the unique features of this loan are the many ways in which you, your spouse, and your future are protected. Consider the following safeguards that have been built into the HECM for Purchase program:
1. Asset Protection. As long as you maintain the home as your primary residence and remain current on taxes, insurance and any homeowner’s association dues, the you will be protected through the Mutual Mortgage Insurance (MMI).
2. Independent HUD Counseling. HUD requires every prospective HECM for Purchase borrower to complete a counseling session with an independent third-party HECM counselor. The counselor is there to make sure that all of your questions can be answered, you understand all of your options and you feel comfortable with the process.
3. You Remain on the Title. The title to the home always remains with the borrower. In many cases, it is even possible to close the loan within a trust.
4. You Can Always Remain in Your Home. You or your spouse can live in the home until the last borrower vacates. So if your spouse passes away, then you can remain in the home. It is important to know that an extended rehab or nursing home stay, generally for a year or more, for the sole surviving borrower, can lead to the loan being called due and payable.
5. No pre-payment penalty. Although the loan is not due and is typically not paid until the senior permanently moves out, there are no additional costs or fees if the loan is paid off at any point prior to that.
6. No maturity date. The HECM for Purchase loan is put into place to last the homeowner’s lifetime. With no monthly mortgage payments and the right to occupy the home until the last senior moves out (or the home is sold), the program provides significant protection against unanticipated future circumstances.
FREQUENTLY ASKED QUESTIONS
WHAT HAPPENS IF ONE PERSON IS 62 AND THE OTHER IS 70?
The age of the youngest borrower is used.
IF MY SPOUSE IS 62, BUT I AM YOUNGER, CAN WE STILL QUALIFY? Yes, only one of you needs to be 62 in order to take advantage of all of the benefits of the HECM for Purchase program.
HOW IS THE HECM DOWN PAYMENT DETERMINED?
The down payment is determined through a HUD based formula that includes the purchase price of the home, the age of the youngest borrower, and the current interest rate.
IS THE INTEREST RATE ON THE LOAN FIXED OR ADJUSTABLE? The interest rate can be either fixed or variable, you choose.
WHO OWNS THE TITLE TO THE HOME?
You and your spouse are the legal owners (or title holders), not the bank or anyone else. CAN I APPLY FOR A HECM EVEN IF I DID NOT BUY MY PRESENT HOME WITH AN FHA MORTGAGE LOAN?
Yes, you may apply for a HECM regardless of whether or not you purchased your home with an FHA insured mortgage.
WHAT HAPPENS TO THE PROPERTY UPON OUR PASSING?
Keeping a home in the family is very important to some of our borrowers and their heirs. The home can be purchased from the estate, by paying off the HECM loan balance. If your heirs wish to sell the home, the HECM loan balance must be repaid. Any money made from the sale of the home beyond that belongs to your spouse or estate and can be transferred to heirs. In addition, no debt is passed along to the estate or heirs.
WHAT TYPE OF HOMEBUYER IS THE BEST FIT FOR THE HECM FOR PURCHASE? The HECM program is being used by a wide variety of homeowners. The HECM is perfect for financially responsible people who want to free up their money to invest in other ways. A homeowner who has good credit and significant assets is a great candidate for the HECM program.
WHAT IS THE HECM COUNSELING CERTIFICATE?
The Counseling Certificate is what you receive to show that you have completed your counseling session with an independent third-party counselor over the phone. FHA requires that each applicant complete a counseling session to confirm your understanding of the HECM for Purchase program.
WHAT IF I DECIDE TO SELL MY HOUSE IN 10 YEARS AND THE MARKET VALUE OF THE HOUSE IS LESS THAN WHAT I OWE FOR THE HOME? AM I RESPONSIBLE FOR THE DIFFERENCE?
The FHA non-recourse clause governing the HECM for Purchase program states that the home is the only asset securing the loan. If the market value of your home drops
significantly and you are unable to sell your home for what you owe, you have no personal liability for difference of the loan balance. Any deficit will be paid by FHA to the lender. WHAT DO I NEED TO KNOW IF I AM BUILDING A NEW HOME INSTEAD OF PURCHASING AN EXISTING?
When it comes to using the HECM for Purchase program for new construction, HUD requires that a Certificate of Occupancy (CO) must be obtained prior to starting a HECM for Purchase loan application. The Certificate of Occupancy (CO) is issued by the local government agency certifying the structure is compliant and is suitable for occupancy. IS MY CREDIT SCORE A FACTOR WHEN GETTING APPROVED FOR THE HECM PROGRAM?
During the loan process, a credit report will be pulled, but your credit score is not a factor for approval because no mortgage payments are being made. A lender is only looking for things such as federal liens.
WHAT DOCUMENTATION IS NEEDED FOR THE HECM?
The same documentation you would need for any mortgage loan. Income and other assets will need to be verified through the proper documentation. If the down
payment is a gift, a paper trail documenting that transaction will need to be provided.
CAN YOU REFINANCE WITH THE HECM PROGRAM?
Yes, if you currently live in your dream home and would like to increase your monthly cash flow by not having a monthly mortgage payment, refinancing with the HECM program is a great option.
What do I do from here?
I want to learn how the HECM for Purchase
loan can work for me...
1. Schedule a meeting to secure a pre-approval letter. We can go over any questions you may have and what you can expect during the entire loan process.
2. START THE SEARCH FOR YOUR NEW HOME! Whether single family home or condo, remember that it will need to meet the FHA minimum standards.
3. Verify the down payment you will need to bring to closing.
4. Review your numbers expected for your HECM for Purchase mortgage and complete your counseling to secure your Counseling Certificate.
5. Close on your perfect home. Congratulations, we did it TOGETHER!
We love hearing about how the HECM for Purchase program is changing the lives of our homebuyers. Below you will find some common experiences that we hear from our clients daily.
The HECM for Purchase program has provided
financial securityfor myself and my spouse.
The greatest feature of the HECM for Purchase program is that you
never have to make a
monthly mortgage payment.
We were able to get the home that we really wanted. We now have the
home of our
dreamsthat we never thought we could afford.
Now we have extra money each month to save up for
dream vacationsthat we have always wanted to take with each other and our family.
We are able to
enhance our retirement incomeand reinvest our money to further
secure our future and retirement.
best part of the building processwas learning about the
Purchaseprogram. Now we get to live in our dream home
without the stressof
paying a monthly mortgage payment.
Sources for information provided:
AAG - American Advisors Group, 1st Reverse Mortgage USA, Liberty Home Equity Solutions, US Department of Housing and Urban Develop-ment. March 2016. Retrieved from http://portal.hud.gov/hudportal/HUD?src=/program_offices/housing/sfh/hecm/hecmhome
Concord Mortgage Group is a division of NOIC, Inc. (collectively, “NOIC”), which is an approved FHA lender. Weinstein Mortgage Team is regis-tered trade name of NOIC. While every effort has been made to ensure the accuracy of the information contained herein, there may be inadvert-ent technical errors that are contained. The materials contained herein is solely for informational purposes and should not be construed as either being legal advice or a substitute for legal advice. This booklet is neither endorsed by, nor prepared in concert with, the Federal Housing Admin-istration nor any other agency. NOIC and Weinstein Mortgage Team hereby disclaim any warranties associated with this booklet.
This booklet was developed and drafted by independent research and knowledge of David Weinstein, Weinstein Mortgage Team, and NOIC to apprise potential applicants and borrowers of the availability of reverse mortgage products and options. Any pictures/images that have been included in this booklet were either independently developed or rights were granted for such use. Subject to the applicable fair use exception under United States copyright law, no portion of this booklet may be reproduced, disseminated, or otherwise used without the express prior writ-ten permission from the author. The aforementioned statement shall serve as notice that this work, in whole and in part, is subject to copyright protection, and the unauthorized use of it is subject to criminal and/or civil penalties.
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Attn: Legal Department 6444 Monroe St., Suite 6 Sylvania, OH 43560
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