By Matt Allen
The information provided in this article is intended to give a general overview of the topic and is not intended as legal advice. For information specific to your situation, please talk with your reverse loan mortgage professional.
Article #3, 4 Reasons To Use A Reverse Mortgage To Purchase A Home
Most people are completely unaware of the fact that you can purchase a home using a reverse mortgage and the tremendous benefits that come with it. In this article, we are going to cover four reasons why you should consider this loan option.
INCREASED PURCHASING POWER
Imagine you are a cash buyer with $200,000 for a new home. Without getting a mortgage, you are stuck in that $200,000 price range. You may or may not find what you want in that price range. You might end up having to “settle” for whatever you can find in that price range.
With a reverse mortgage, you could easily double or more your purchasing power because you are only going to need 50% down or less. In other words, your $200,000 price range could now be $400,000 or less. This could open a whole new world of housing to you. You now have a better chance of finding your dream home.
RETAIN CASH FROM THE SALE OF YOUR HOME
Imagine you just sold your home and you netted $200,000. You and your spouse have decided that downsizing is a smart move. You have found that perfect home in an area you have always wanted to live. Even better is that the asking price is $200,000; the exact amount you got from the sale of your home.
At this point, you have two options; pay cash or look at using a reverse mortgage. If you pay cash, all of your $200,000 will be tied up in the home’s equity. If you used a reverse mortgage, depending upon your qualifications, you would need to put down $100,000 or less. You could keep the remaining money liquid and put it into the bank, invest it, vacation more or do anything else you want to do with that cash.
RETAIN RETIREMENT ASSETS
Many people pull money out of their retirement assets in order to pay cash for a home. There are several things that need to be considered with this decision. First, there may be tax consequences to pulling money out of a retirement fund. Second, you are tying up liquid assets into a non-liquid investment. Third, there is no growth on equity so you are losing out on the potential growth in your retirement assets. Finally, you could be negatively impacting the success rates of your retirement plan.
FREE UP CASH FLOW
With any other traditional loan you may use to purchase a home you can expect payments for the next 10, 15, 20 or 30 years. With a reverse mortgage, there are no monthly payments. There is no doubt that you could find other things to spend your money on over a monthly mortgage payment.
There you have it, four good reasons to use a reverse mortgage to purchase a home. Don’t let misinformation and misunderstandings keep you from at least considering and looking into using a reverse mortgage to purchase a home.
Want to learn more about using a reverse mortgage to purchase a home? Request my free report “How to Buy A Home With 50% Down Or Less & Never Make A Monthly Payment” at 541-292-5423 and ask for Kitty. Or, if you have immediate questions, please ask for Matt.