A question for my Realtor and Financial Professionals: What do retirees, and those preparing to retire, want in what could be their last home purchase?
- Single-story living
- Modern design
- Upgraded kitchen
- Outdoor living space
- Low Maintenance
- Neighborhood and nearby amenities
- Proximity to family, children and grandchildren
- Manageable or no monthly payments
They just sold their home, or are thinking about it, and want to purchase the next home all cash. But, all cash in this market doesn’t find a home that meets their wants and needs.
There is a unique, little known loan program that was designed just for them that you should consider recommending.
It was created specifically for the issue middle income and affluent boomers have had in purchasing their dream home… their cash available to spend won’t meet all the requirements wanted in their last dream home.
It is called the Home Equity Conversion Mortgage Purchase Program, or just H4P, and has only been offered since 2009 and the Great Recession.
What makes this program different? It carries a lower interest rate than current market, requires just one payment of about 50% of the purchase price of the home and there is no repayment required for as long as the home is the borrower’s primary residence (where the borrower typically spends the majority of the calendar year) as well as property charges and upkeep are maintained.
How does this help? Your client is doubling their purchasing power compared to paying cash or taking out a regular mortgage and effectively doubling Realtor commissions while preserving portfolio under management.
And now for 2022, your clients can qualify for homes up to $1,000,000 or more.
How Do They Qualify?
The new H4P program is for borrowers 62 and up, are required to take independent HUD approved counseling and must undergo a financial assessment. It’s insured by the FHA, regulated by HUD and is a mortgage just like any other, except with far more protections provided through vigorous federal government oversight.
Protections and Benefits?
- The borrower still owns the property and remains on the deed. The lender merely has a lien on the property, just like a “normal” mortgage.
- The loan is much easier to qualify for, in that income requirements do not include a monthly mortgage payment and credit history is reviewed as opposed to credit scores.
- There are no personal guarantees from client or heirs. The home is the sole collateral and the borrower will never owe more than the value of the property at disposition.
- It can have a unique line of credit feature that grows in borrowing capacity at the same rate as is being charged on the outstanding loan balance.
- The line can never be called or frozen regardless of the value of the home.
- The loan can grow to be in excess of the market value of the home, making it a perfect hedge against a housing bubble blowout.\
- There is no prepayment penalty, nor prohibition against making payments, on the loan. And, each payment made on the loan increases the available line of credit balance dollar for dollar.
- Frees up 6-12 month liquidity reserves for better allocation with line of credit availability for any reason within 3-5 business days.
- When the time comes to sell or the borrower no longer lives in the home… simply sell, pay off the mortgage and all remaining equity belongs to the client or their heirs.
It’s a mortgage just like any other, except far more safe and far more flexible.
Just like that, they can buy the home they really want, without tying up a large portion of their savings or drawing down their long-term retirement portfolio.
Simply reach out to us at Central Florida Reverse Mortgage and let’s discuss how we can open an entirely new source of income for realtors and a preservation/enhancement of long-term retirement assets for financial professionals. All, with a product designed specifically to meet your client’s needs for a lifetime of happiness… while enhancing long term cashflow and quality of life.
Richard W. McWhorter, NMLS 1618644, with McWhorter Mortgage, LLC, NMLS 1486483, dba Central Florida Reverse Mortgage is an independent reverse mortgage specialist and Certified Mortgage Planning Specialist® exclusively serving Florida (FL LO-44137) and Georgia (GA Mortgage Residential Licensee 57530). Follow him on LinkedIn, the Central Florida Reverse Mortgage website or contact him directly at Richard@CFReverse.com.
McWhorter Mortgage, LLC provides an Equal Housing Opportunity. Information is subject to change without notice. This is not an offer for extension of credit or a commitment to secure a loan. Some restrictions may apply. McWhorter Mortgage is licensed in Florida and Georgia, call for originator recommendations in other states. This material is not from HUD or FHA and has not been approved by HUD or any government agency.