Boost your business with Baby Boomers
Using the Home Equity Conversion Mortgage for Purchase
Builders and Realtors need to know baby boomers are projected to have the largest household growth rate in the next decade with millions of seniors moving into the 60+ age group in the next 10 years?
Since they tend to have fewer obligations than other generations, baby boomers are given the flexibility and freedom of choosing where to live.
The H4P program can help them find a home that fits their needs with no monthly mortgage payments, except for taxes, insurance, and general maintenance.
How Can a HECM for Purchase Benefit Seniors Looking to Buy?
An H4P can help your customers buy their next home, along with 30%-55% money down.
To pay for the down payment, the funds can come from the sale proceeds of their last home, 401k, and other sources that meet the U.S. Department of Housing and Urban Development (HUD) and lender guidelines.
The amount of the down payment is calculated from several factors, including:
1. Age of the youngest borrower;
2. current interest rates and;
3. the lesser of appraised value, purchase price, or the FHA lending limit
The H4P loan does not require monthly mortgage payments, except for taxes, insurance, and general maintenance.
- Must be 62 or older and live in the house as their primary home; (Texas requires all borrowers be at least 62 or older)
- New construction once the Certificate of Occupancy (COE) is issued;
- One-to-four units;
- Everyone on the title has to complete the required counseling (non-borrowing spouse, spouse, kids, POA, etc.);
- Maximum loan amount is based on the age of the youngest person on title;
- All liens on title must be paid at closing and MUST be in the sellers name;
- The difference between the purchase price of the new home and the HECM loan proceeds must be paid in cash from qualifying sources such as the sale of prior residence, homebuyer’s other assets or savings
Modernization isn’t the only need for retirees to upgrade, but often times they need to do renovations to their current home.
It’s far more cost-effective to live at home and get in home care than it is to live in a long-term care facility.
Medicare will help seniors pay for living in a nursing home but it’s a lot harder to get government assistance for upgrading their home.
Figure 1- Figure 2-
1: Moving forward to economic stability, MBA David H. Stevens
2: Home in Retirement: More Freedom, New Choices in 2015, Merrill Lynch Bank of America Corporation
Benefits for Your Customer
- No More Monthly Payments (payment of taxes, insurance & maintenance required)
- Increase in clients cash flow
- Minimal credit and property requirements
- Down Payment varies, averages only 35-55% of purchase price
*The down payment on your new house required is determined on a number of factors, including your age, current interest rates, and the lesser of the home's appraised value or purchase price.
Benefits for You and Your Company
- Projected increase for sales and add-on's of 30% and up
- More Foot Traffic
- Happier Buyers who get more for their money
- Average purchase price increase
- Better Realtor and Builder Relationship