Reverse Mortgage Loan Blog

New government housing rules for 2009 include a number of changes to reverse mortgage regulations. One of the more compelling changes for older Americans is the ability to now use a reverse mortgage for purchase, which is the right to purchase a home and use a reverse mortgage to pay for a portion of the purchase price. This change will help seniors save time and money while avoiding the challenges associated with securing a forward mortgage in today’s worsening economic climate.

Reverse mortgages offer a number of advantages over traditional forward mortgage products for those 62-years or older that are considering purchasing a home. Borrowers purchasing with a reverse mortgage are not subject to income or credit thresholds; the only requirements are that they live in the home as their primary residence, maintain it properly and pay all applicable taxes. Plus, seniors do not make monthly loan payments when using a reverse mortgage to acquire a new home. This makes a reverse mortgage for purchase an attractive way to downsize during retirement or make a long-planned move to a new location.

“This legislation provides seniors with an incredibly powerful tool because it simplifies two transactions into one and allows them to move into a new home without the burden of monthly payments,” said Eric Bachman, founder and CEO of Golden Gateway Financial. “Even borrowers with impressive credit and income are finding it hard to secure a forward mortgage and take advantage of the current real estate market. Using a reverse mortgage will also help seniors stay liquid when downsizing.”

In order to help older homeowners better understand and take advantage of this new program, online senior financial resource Golden Gateway Financial today launched a Web-based reverse mortgage for purchase tool called the Downsizing Calculator. This calculator will help borrowers quickly identify whether this program is right for them and how much money they are eligible to secure. It joins the company’s lineup of award-winning tools, including its Life Settlement Calculator, Budget Reality Check, and the original Reverse Mortgage Calculator that won accolades from The Wall Street Journal and Kiplinger’s.

According to the new U.S. Department of Housing and Urban Development (HUD) regulations, a borrower can now purchase a new home and secure a reverse mortgage on it in the same transaction by applying the reverse mortgage payout towards the purchase price of the home. A borrower can then pay any difference in the purchase price from the proceeds of the sale of their current home or any other source of available funds.

“It used to be that seniors had to find a way to either afford to stay in their home or to pay to downsize,” continued Bachman. “Now, a reverse mortgage could be the right choice for both of those scenarios.”

Based on simple inputs such as zip code, home value and a borrower’s age, the Golden Gateway Financial Downsizing Calculator can provide borrowers with a personalized look at the loans available to them and how these funds could be applied towards purchasing a new home. The calculator also provides the basic details of each available reverse mortgage loan, including available credit, value of home in 10 years and cash payouts over time.

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