Home loans: New Hope for Seniors Moving to a New Home or Location

The beginning of the year saw the new administration take office and introduce many programs to save the borrowers from the back breaking burden of debts. January also saw the introduction of new rules for seniors who are considering relocation or moving to a new home. The program is called the HECM purchase program but most of the real estate professionals, lenders and the seniors themselves are still unaware of working of the program.

This new program is aimed at seniors who have crossed the age of sixty two. People who have proceeds or are expecting them can avail this plan. They can purchase a first home, replace their existing homes, use money to make down payments and finance the rest of the home with a reverse mortgage.

Before the introduction of this program a senior would have to take out reverse mortgage to fund or purchase a new home if they wanted to move out of their current house and they were short of cash. This means that they would have to pay for the house in cash completely. They would then have to proceed to sell their previous house and with that money pay off the loan. Usually a new reverse mortgage ahs to be applied for on their new home so that they get some cash back into their hands. Thus the process is long, tedious and expensive. The closing fees alone amounted to thousands of dollars which was lost never to be recovered.

With the new program a senior can sell his home and use part of the money to pay a down payment on the new house and take a reverse mortgage for the rest of the finance. Thus the entire process is simpler and easier. The qualifications necessary for being eligible for new program are:

• The age of the youngest owner should be sixty two or more meaning that both husband and wife should be above sixty two years of age.
• Among the purchase price and appraised value of property only the lower value would qualify.

The program does not verify the credit history of the applicants but proof of funds which are available for closing should be submitted. There are chances that all the closing amounts would be included into the loan. A part of the money from the sale of the house can be retained as used as retirement funds. This program has an added advantage that tax benefits can be enjoyed by the applicants. The current tax laws state that tax exemption up to five hundred thousand dollars would be allowed for people who have gained on their primary residence for at least two of last five years. The borrowers can live in a new home suited more to their current needs. In addition to tax benefits and retirement funds the seniors would now have better bargaining power while purchasing a new home. Thus the laws of leverage should be used to bring relief and rest for the rest of the borrower’s lives.