If you’re looking to downsize or you want to sell your house and you’re afraid you can’t afford the next home you want to buy, reverse mortgages are just the thing you need.
Looking to sell a home in Southern California?
Looking to buy a home in Southern California?
Today I’m joined once again by Andrew Scammon from Alpine Mortgage Planning, and this time he’s going to help me explain how you can purchase a property with a reverse mortgage.
This option is ideal for someone who wants to move but doesn’t want to have a mortgage payment and may not have the cash to buy a property as all-cash. Generally speaking, a reverse mortgage allows them to double their purchasing power.
Let’s say you have $200,000 net profit from your home sale, but that’s not enough to buy the next property you want. By using a reverse mortgage, you’re in the market for a $400,000 home. It allows you to complete both transactions—you can sell the house you want to move out of and qualify for the reverse mortgage to purchase the property you want to stay in for the rest of your life.
If you have a larger home with $200,000 worth of equity built up and want to downsize, you can sell your current home for $600,000 and buy your next house for $400,000 and eliminate that mortgage payment altogether.
Reverse mortgages can double your purchasing power.
In Andrew’s experience with these situations, the seller completes the sale of their house first before coming to him to make the arrangements for the purchase of their new property. The key requisite in this scenario is the new property has to be FHA-approved. This means if you’re looking to downsize into a condominium, you need to be cautious that you’re only shopping for condominiums that are FHA-approved. If you’re moving into a smaller cottage or a single-family home, this issue doesn’t come into play.
A reverse mortgage is more comparable to a cash product than a traditional mortgage. The reverse mortgage process usually takes about six weeks. Before you start it, you need to know what to expect at closing and years into the future. There are no bad sides to a reverse mortgage unless they’re a surprise. You need to know all the details of how the reverse mortgage will mesh with your retirement plans—how it will affect your estate, your mortgage balance, etc. It’s not a problem if your balance goes up—unless that’s a surprise.
If you’d like more information about reverse mortgages and how to use them, you can reach Andrew at (562) 743-0111 or email him at SoCalReverse@gmail.com.
If you have any other questions, feel free to give me a call or shoot me an email. I’d be happy to help! 