Many senior homeowners have lived in their homes for a very long time, have no desire to move and have gotten reverse mortgages so that they can continue to live in their homes payment free for life while accessing their equity to help supply them with income or cash to meet their living needs. Still others have wished that they could relocate, choosing either to be nearer to loved ones or pick a property that was more conducive to their current life style or needs (such as a single story when their home of many years was a multi-level property, one that was a more appropriate size for their current needs, closer to their family or friends, or located in a senior community). For these active seniors who were not ready to move into assisted living and yet did not want to stay in their current properties, it used to be that they could only use a reverse mortgage to purchase the new home they desired if they used one of the few higher interest rate, proprietary-type programs which allowed for home purchases. It looks like this is about to change!

The current bills in congress are going to change the way the FHA does business with many of its loan programs, but one of the changes that appears to be approved by both the House and the Senate concerns the addition of allowing the government Home Equity Conversion Mortgage (HECM or “Heck-um”) to now allow for purchases as well as refinances of existing homes. There are many other changes being proposed as well that will probably go into effect very soon that we won’t discuss here but this one change alone is exciting because as soon as the changes are signed into law and become effective with the FHA, senior borrowers will be able to purchase the home that suits their needs by using a reverse mortgage, and not have to rely on conventional financing.

This is important for a number of reasons. Firstly, there is no income or credit qualification requirement for the reverse mortgage. Borrowers with limited and fixed incomes typically don’t qualify for conventional financing. Borrowers who needed to move or had a strong desire due to any of the reasons listed above, often had no alternatives unless they could purchase their new home for cash due to conventional financing qualification. These borrowers most often “made due” in their present situations even though they really desired to make a move that would either make their lives so much easier or fulfilling. After the government reverse mortgages are made available for purchases, senior homeowners will have a real, viable option to be able to make choices about where they will live that weren’t previously readily available to them.

The Stimulus Bill is expected to be signed into law by the President next week. Once the new provisions to the reverse mortgages are put into place by HUD, seniors will be able to utilize reverse mortgages for home purchases. Those seniors who have been thinking about how nice it would be to move into a home but always thought that there was no way they could qualify for (let alone make the payments on) a conventional loan, watch for the new provisions for government-insured reverse mortgages which should be available for purchases soon.

Michael G. Branson (CEO All Reverse Mortgage Company)is a Mortgage Broker who has over 31 years of mortgage banking experience. Toll Free (888) 801-2762

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