Although the reverse mortgage program has been around for decades, a new program was created recently for purchases. In 2009, senior homeowners were given the option of using reverse mortgages to purchase a new residence. Known as the HECM for Purchase program, this FHA insured loan was created to assist seniors in relocating and for home renovations. However, Texas residents have not been able to utilize the program for relief. Texas is the only state in America that does not allow the reverse mortgage program for purchases.
Texas Reverse Mortgage for Purchase
Plagued by legislation that did not allow home equity lending, senior homeowners in Texas could not utilize the program until 1997. Since then, reverse mortgages have been used by over 50000 seniors however not for purchasing a new home. It is the second largest market for the product in the United States. Instead seniors could only use a Texas reverse mortgage by receiving cash from the equity in their home. This cash could be used as relief for paying medical bills, home renovations and increased costs of living.
With the real estate market seeing an upturn, legislation is said to be in the works. The Texas reverse mortgage program for purchases could be available as soon as 2013.
Why Do Seniors Need This Program?
Senior homeowners who are in need of a property change could use the reverse mortgage purchase program. Often times, homeowner’s needs change as they get older. Accessibility is one reason someone 62 years or older might want to relocate their home. They may need better accessibility to the home through ramps or possibly need a location that is more accessible to family and caretakers. Some homes may not be easily changes for handicap access and sometimes the homeowner needs to be closer to caretakers.
Another reason why the reverse mortgage purchase program is necessary for senior homeowners is the size of their home. A senior living alone in a multifamily house incurs higher monthly utility bills than they need. Air conditioning for a larger home can cost a hefty amount as well. Also, maintenance and upkeep on a larger place can also cost more.
Relocating to a smaller home or somewhere that is closer to assistance can be a need for seniors that may not be obtainable. Traditional programs do not offer the same benefits as a reverse mortgage. In many other situations, the senior homeowner would get stuck with a bill they could not pay back. Reverse mortgages are free and clear, with the purchase program the senior citizen can move into a new home without having to make monthly payments.
Should you be considering a reverse mortgage for purchasing a new home, it is suggested that you speak with an FHA approved lender. A mortgage banker who offers HECM loans can help you find out how the government mortgage program works. They can also tell you about other available options. If you interested in a Texas reverse mortgage for a purchase you will have to wait until legislation is passed that allows it.
