Florida HECM for Purchase Overview and Description

A Florida HECM for Purchase is an FHA reverse mortgage that allows seniors, age 62 or older to purchase a new principal residence in Florida using the equity from the sale of their previous home, or other cash savings. The remaining balance can be paid for with a reverse mortgage. You will never need to make another mortgage payment as long as you live in your home as your primary residence, maintain your home, and pay taxes and insurance. The loan is available with either a fixed or a variable rate.

The Florida HECM for Purchase allows seniors to purchase a new principal residence in Florida and obtain a reverse mortgage within a single transaction. Seniors can use the Florida HECM for Purchase to relocate to other geographical areas to be closer to family members or downsize to homes that meet their physical needs.

An example:

A couple wants to purchase a home valued at $300,000. The youngest spouse is 67 years old. The current interest rate is 5%.

Purchase Price of home	$300,000
Available Reverse Mortgage proceeds after loan and closing fees (calculation based on age of youngest borrower, interest rates and home value)	$184,000
Minimum down payment required	$116,000
Monthly mortgage payment	$0

Purchasing a Florida home with a Reverse Mortgage is similar to purchasing a home with a conventional mortgage, with two minor exceptions. The value of the home for purposes of calculating the maximum reverse mortgage amount will be the lower of the actual sales price, appraised value or FHA maximum loan limit. The required monetary investment in the purchased property is the difference between the value of the home and the sales price plus the total of the HECM closing costs and the servicing set aside amount.

Reverse Mortgage appraisals, inspections, contingencies, documents, and closings are virtually the same as those with a conventional mortgage.

To qualify for a Florida HECM for Purchase, the purchased property must meet standard HECM reverse mortgage eligibility requirements. Multi-unit properties and certain condominiums are eligible. Construction of the purchased property must be completed by closing and ready for immediate occupancy. The borrower must occupy the home within 60 days of closing.

For more information about using a Florida reverse mortgage to purchase a new home, please call us at (800) 320-4001.