March 11, 2017

Home Buying Options for Retirement

How to pay half the price for your new home

This spring we have a lot to be grateful for, and a lot to look forward to in 2017. The parade of Homes starts the early spring out with another 28 beautiful homes to look at and find out what is new, fresh and trending. I know some look at the Parade of homes as an event where we can look at how the affluent live and wonder if we married the wrong guy—right? But, really, just a fun time to see some beautiful homes and some new and simple decorating and furnishing trends.

As always, we finance several of the Parade homes and, as the largest senior lender in the state with all of the senior FHA loan programs, we look forward to helping those that are over 62 perhaps purchase a home that is nicer than they might have thought they could afford.

The home equity conversion mortgage (HECM) loan for seniors over 62 allows you to purchase a home for roughly half the price it would have been, with no mortgage payments for life. You can purchase a $300,000 home for $150,000 and own it free and clear of any mortgage payments. You own the home, so just like paying cash, you pay your own taxes and insurance at the end of each year.

Many of our clients sell their home in Salt Lake for $400,000 to retire to beautiful St. George, and only have to put down $150,000 on a new home that costs $300,000. With the FHA loan, they are able to live in the home free and clear of any mortgage payments, and still have the rest of the funds from the sale of the Salt Lake home in their savings in case they need it.

Some clients choose to keep that Salt Lake home, and go back and forth in the winter and summer. Through the HECM loan they are able to purchase the St. George home for half the price (with no mortgage payments) which gives them more financial flexibility to not have to immediately sell the Northern Utah home. They can have both homes, and go back and forth during the year, if they choose.

The new home simply has to be your primary home—meaning you would need to be here for six months out of the year (and of course you can’t rent the home out and use it for rental purposes). Other than that, you can have multiple homes to go back and forth to and from, and not be strapped to a mortgage payment or have to put all of your cash into one home.

More than half of our senior clients today who are retiring and buying homes opt to use the FHA senior HECM loan instead of paying cash or using a conventional loan. Over the past five years, we have funded more seniors buying a home with this loan than all other brokers and lenders combined, as we are the only lender in Southern Utah that can fund and underwrite and service our own HUD insured reverse purchases loans.

Remember when buying a home for your retirement, you need to look at all of your options and have your investment advisors or mortgage planner review them with you, including the the option of a HECM loan.

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