We know how it goes: you spend years investing in that big, beautiful home of your dreams. You might have even raised a few kids in that house … and it’s been good to you. But sooner or later your home might start to feel a bit oversized … what is commonly referred to as an “empty nest” kind of feeling.
Too much space means too much time spent cleaning. Transitioning to a smaller home or condominium can be the perfect way to make the golden years more manageable. It can also open up a significant amount of cash, especially if your mortgage is already paid. But here’s what you don’t know: you might not have to sell your house in order to downsize.
For some people in Redding, CA, a reverse mortgage is the perfect way to go from an empty nest to a perfectly-sized estate. Read on to find out how.
Using a Reverse Mortgage to Downsize
More and more people are becoming familiar with HECM Reverse Mortgages. For many retirees, this can be an easy way to access your home equity without having to sell the house and move away. The supplemental cash can help for almost anything: from paying your property taxes to funding your dream vacation.
HECM for Purchase is something slightly different. With one of these, you can use your home equity to purchase an additional home. You don’t have to make any new mortgage payments with an HECM for Purchase; You’re using the equity that you already have in your first home.
Purchasing a Home with a Reverse Mortgage
Just like conventional HECMs, HECM for Purchase requires the applicant to be at least 62. The other catch is that is usually requires a down payment of about half the total purchase price. Usually, this is paid by the sale of your first home.
Your down payment serves as equity in the new property. Your loan will essentially “eat” into this down payment, which is why you don’t have to make mortgage payments. Generally speaking, the older are, the more you can get with the loan, and the less you’ll have to put down up front.
When it comes to making moves for a simpler, more enjoyable retirement, this is one of the most immediate solutions.
Should I Use a Reverse Mortgage to Downsize House Sizes?
Like most retirement strategies, a reverse mortgage for purchase is not for everyone. This is something that you will want to discuss with a professional advisor before applying for. There are a lot of factors that determine whether or not this kind of thing will end up being a good deal.
Remember: a new home purchased with a reverse mortgage will not accrue new equity. This is the trade-off for taking a loan with no-payments. Talk to your personal advisor if you want to learn more.Questions? Contact Chris Today!