Did you know that there is a program that allows seniors (62 years and older) to purchase a new home without taking on a new monthly mortgage payment?  It will enable seniors to:

A reverse mortgage is a non-recourse loan that enables senior homeowners (age 62 and older) to convert a portion of their home’s equity into tax-free funds.A new twist on a reverse mortgage  is called a Home Equity Conversion Mortgage (HECM) For Purchase and it is currently offered by Wells Fargo.

HECM is an FHA-insured reverse mortgage than enables senior homebuyers to purchase a new primary residence and obtain a reverse mortgage in simultaneous transactions with no monthly mortgage payments.  HECM allows buyers to combine reverse mortgage proceeds with a down payment from their current home sale or other assets, to purchase a new home.

Features of the Home Equity Conversion Mortgage (HECM) For Purchase program are:

My job as an Alain Pinel Realtor and Seniors Real Estate Specialist (SRES) is to help you make the best move to a new home.  Please call Rick Bonetti at 408-857-8800 when you are thinking about selling your home; I have many resources available to assist you.

Yesterday I was at a Seniors Resource Faire in Campbell, CA where I met  Jeff Thompson, Wells Fargo Reverse Mortgage Consultant.  All he does is reverse mortgages and he seems to really know his business.  Call Jeff at 408-385-1244 for specific information about reverse mortgages.

Disclosure:  Borrowers must be age 62 or older. Consult a tax advisor. Reverse mortgage borrowers are required to obtain an eligibility certificate by receiving counseling sessions with a HUD-approved agency. Family members are also strongly encouraged to participate in these informative sessions.  Monthly reverse mortgage advances may affect borrower eligibility for other programs. Consult either a local FHA program office or an attorney to determine how, or if, monthly reverse mortgage payments might affect a specific situation.

Should seniors who have lived in their Saratoga home for many years and have built up considerable equity sell now or wait until the value of their home rebounds?  What if they need cash now – are there other ways should they consider to tap that equity without selling.

Wall Street Journal Online has a report called Encore, geared for retirement planning concerns.  A recent article Trading on the Future suggests that a “shared-appreciation arrangement” (equity release) is gaining popularity among homeowners in or near retirement, as an alternative to a standard equity loan or reverse mortgage on their home.

Through a share equity agreement a homeowner agrees to give up part of a home’s future appreciation in exchange for cash — typically 10% to 15% of the property’s current value.  If a property’s value has declined by the time the owner decides to sell it or terminate the contract, the homeowner gets to keep some or all (depending on the agreement) of the cash he or she is given upfront, but if it appreciates they might give up half the gain and in the end pay more than if they had taken out a conventional home equity loan.

Part of the initial appeal of a shared equity agreement to homeowners is that they aren’t saddled with monthly payments, as in the case of a home-equity loan and closing costs are typically less than that of a reverse mortgage.  But be careful, because as the article explains, there are risks involved.

In my personal opinion, a standard equity loan is a preferred way to go if you need cash to live on right now (because rates are low) and want to stay in your home a while longer.  If you are ready to sell for other reasons, call me and I will let you know what your home is currently worth and what real estate market trends are telling us.  It’s your decision when is the best time to sell your home and you need good data and a Realtor you trust to help you make that choice.

Rick Bonetti | APR Referral Network | 408-857-8800 | DRE #01237009