Last week, the reverse mortgage for purchase product and our CEO, Richard Mandell, were featured in The Wall Street Journal. In the article “A Reverse Mortgage to Buy a Home,” Anya Martin packs in a ton of information, explaining how you can use a reverse mortgage to purchase a home, how to qualify for the loan, and how to use it strategically in retirement.
Martin even features a couple, the Masseys, who used the loan to purchase a home that would cost $150,000+ more than the Massey’s home was worth. Not only were they able to purchase the home (after making a $240,000 down payment), but they were also able to establish a line of credit with available funds that could be drawn on whenever or, if left untouched, could grow in value over time – even if their home value declines.
If you’re wondering how the Masseys feel about their loan, Martin provides a great quote: “‘We’re happy because we don’t have a monthly payment and we can put our money in a safe [federally insured] investment,’ Mr. Massey says.”
Mr. Massey isn’t the only one quoted in the article. Our very own Richard Mandell also added a few words on the program.
Martin writes: “Retirees often have trouble meeting underwriting requirements for regular mortgages, which are based on income more than assets, says Richard Mandell, CEO of One Reverse Mortgage, a subsidiary of Quicken Loans. A reverse mortgage “gives retirees the opportunity to move to a different home that better suits their needs, be closer to family or live in a warmer climate, he adds.”
When it comes to addressing concerns about the reverse mortgage program, Martin turns to co-director of the New York Life Center for Retirement Income at the American College of Financial Services, Jamie Hopkins.
In the article, Hopkins says, “A top concern has been that seniors will draw down their home equity too rapidly, forcing them to exhaust other savings…But used strategically, buying a home with a reverse mortgage allows seniors to invest in higher-yield investments than their home.”
Aside from this concern, Martin also lists a few other considerations, including under-construction homes, non-recourse, and possible foreclosure (if you do not uphold your financial obligations of the loan, such as paying your property taxes and homeowners’ insurance).
For more information on how to purchase a home with a reverse mortgage, give one of our licensed experts a call. They can answer your questions and send you more information with no obligation. For more articles on reverse mortgages, check out our In the News section.