FHA Insured Loan
FHA Insured Loan Lets You Buy Your Dream Home for approximately 50% Down and No Monthly Principal & Interest Mortgage Payment
If you’re at least 62 then you will want to learn about the FHA-insured HECM for Purchase program, or H4P for short.
The H4P program was launched in January, 2009. However, you may not be aware of this program because it is not frequently advertised to the public. Currently, Professional Mortgage Alliance, LLC is one of the most experienced sources for this product in the nation. In other words, it’s very unlikely that your local bank specializes in this program.
How Does The H4P Program Work?
First, you need to be aware that the program is insured by the federal government and the rules allow you to buy your dream home for approximately 50% down and NEVER make a monthly principal and interest mortgage payment.
Every day I hear “it sounds too good to be true, what’s the catch?” The only catch is you have to be at least 62 and the new home has to be your primary residence. ¹
Next, the amount required to bring to closing is based on the youngest borrower’s age and the purchase price of the home. For example, a 70 year old purchasing a $200,000 home would bring just $96.677 to closing. ² That’s it…and never make a single monthly principal and interest mortgage payment!
Understanding the Purchase Transaction
As we have already learned the amount available to a perspective senior borrower depends on the borrower’s age, (the youngest borrower in the case of a couple), value of the subject property, FHA insured loan limit (Maximum $636,150) and the current interest rate.
The process is so drastically different from a forward mortgage. There are no income or debt ratios. There is not a generic software program in which to enter “basic financial” information regarding your client and instantly learn what he or she will qualify for from various lenders. In fact, each national reverse mortgage wholesaler has created their own proprietary reverse mortgage software to qualify perspective clients.
Due to incredibly strict government controls, rates, terms and costs are very similar regardless of what lender you may choose to use. The problem is very few mortgage brokers or mortgage lenders “specialize” in reverse mortgages. This is a very important factor, especially in the case of a HECM Purchase. Choosing the right reverse mortgage lender is usually the difference of stumbling through this procedure or having it be a very pleasant experience for both the client and the Realtor.
It is imperative that your perspective borrower be pre-qualified by a reverse mortgage specialist. A reverse mortgage is an FHA loan but not all FHA approved mortgage originators have been specifically trained in reverse mortgages.
¹ Borrower must maintain home as primary residence and remain current on property taxes and homeowner’s insurance
² Subject to change. Rates and down payments can fluctuate daily