Reverse Mortgage for Purchase Transactions
Mr. and Mrs. Johnson (both are 75 years of age) want to sell Home A and purchase Home B.
Home A is a large home that served them well in raising their children, but is now too large for their needs, and a lot more work to maintain than they desire. Home B is a smaller but newer home in a country club and golf development. This home will be more expensive, but much better fit for their lifestyle with amenities and maintenance being taken care of by the association.
Home A: Net proceeds: $550,000.00
Home B: Purchase Price: $725,000.00
Mr. and Mrs. Johnson are not willing or able to take on a new regular mortgage. The solution to this dilemma becomes clear:
Combine the proceeds from the sale of Home A with a Reverse Mortgage and see what happens: Proceeds from House A: $550,000.00
Combined with Reverse Mortgage Funds: $175,000.00
Purchase Price $725,000.00
Mr. and Mrs. Homeowner can now purchase this home priced at $725,000.00 with NO MORTGAGE PAYMENT.
In addition to the funds available used for the down payment of the new home, Mr. and Mrs. Johnson will have a credit line available from $67,734 to $162,500, depending on the program they choose!** They can use these funds to pay their property taxes, improve the new home, or anything else they desire, all with NO MORTGAGE PAYMENT! In fact, any unused funds will remain available, and GROW at 5.00 to 5.72% each year!
**The amount of funds they are eligible for in a reverse mortgage is calculated using their ages (75), the value of the NEW home, and the current interest rates. The current initial interest rates on 9-3-2007 were 5.16% for a HECM, to 8.41% for a Jumbo Cash Account. The closing costs on a reverse mortgage are rolled into the loan- so very little out of pocket costs are involved. A home inspection and appraisal are common.
To get a personalized quote from a Certified Mortgage Planning Specialist, please call us at 800-216-6322, or e-mail us at Bill@morningstarmortgage.com