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Staying Financially Healthy

HECM for Purchase - ​An Under Used Tool for Older adults

10/8/2020

 
HECM for Purchase remains one of the most under-tapped resources for older adults and realtors alike. Even though using reverse mortgages for purchase have not quite met the lofty assumptions for the product, both loan originations and home sales would benefit from the potential boost.  But that doesn’t mean that individuals — as well as isolated markets — haven’t had visible success with the Home Equity Conversion Mortgage for Purchase program.

Undeterred by the lack of home buying, Millennials tend to dominate the national conversation surrounding real estate. Nonetheless,  people over the age of 60 account for approximately a quarter of all buyers.
In America, 75 million people make up the baby boomer cohort with 80% of them already own their home. Contrary to their younger counterparts, older homebuyers come with their own exclusive challenges and advantages when it comes to the standpoint of realtors. That is why there is a Senior Real Estate Specialist designation. You’re not only going to get a purchase — you’re going to get the sale of their [existing] home. If you are not SRES certified then knowing a reverse mortgage specialist is a great place to start.
​

Reverse mortgage for purchases can help older adults experiencing the so-called grey divorce, in which an older couple decides to end a marriage and get rid of the family home due to the potential emotional baggage associated with the home. Those familiar with the HECM for Purchase can help the realtor help both individuals land on their feet in a new home that they may have not been able to afford otherwise.

Chris Bruser, a HECM for Purchase specialist in the Florida, pointed out that these products are “distinctly different” from a traditional reverse mortgage, meaning that the product caters to a different potential user than a regular HECM. Bruser stated, “This option, [buyers] are going to want to know about, because the HECM for Purchase allows them to pay a fraction of the full purchase price of that home.”

Older couples may not be able to secure enough proceeds from the sale of their current home to buy the next-step home of their dreams — a particular burden in hot markets like Los Angeles, where even modest homes carry substantial price tags.

Realtors should reach out to recent clients who may find themselves in that situation and offer the HECM for Purchase as a viable option if they’re over age 62.

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    Mathius Marc Gertz
    Mathius Marc Gertz MBA, AFC®, CAPS
    Marc has 36 years in financial services and 6 years in teaching.
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  • Apply Now
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