New Reverse Mortgage Product Expected to Increase Sales in the Wilmington NC Market
As of Jan 1, 2009, Purchasers of Real Estate will be able to take advantage of a New Mortgage product designed specifically for them. A HECM Mortgage for Purchase, (Home Equity Conversion Mortgage), which is more commonly known as a Reverse Mortgage, can now be used to Purchase property in a ýForwardý Real Estate transaction, allowing Real Estate to be purchased for cash for 45 cents on the dollar or less, depending on the buyers age, starting at age 62. Every year over the age of 62, the up-front cash required decreases.
Most have heard of a Reverse Mortgage. This is a great tool for those age 62 and over that have equity in their homes. These are designed to allow homeowners to tap their ýdormant equityý in their homes for any purpose. Originally designed as a measure of ýlast resortý for some homeowners, Reverse Mortgages are moving more mainstream and are being used for additional purposes, such as providing funds for everything from Long-term care Insurance, Annuities, and other Investments, to providing current and future financial needs.
These are called Reverse Mortgages, and although a small portion of overall Mortgages today, it is estimated that in 10 years these will make up 50% of all FHA mortgages originated, based on demographics. There are approximately 8000-10,000 folks turning 62 every day in the US, and for many, the primary residence represents their largest Investment. And, when you take into account the current economic climate, you have a market that wants and needs this product.
The New Product, called a HECM Purchase, will allow those 62 and over to use the Reverse Mortgage to finance the purchase of a new or existing home utilizing the Reverse Mortgage.
The new home must be the primary residence. Under FHA rules, you can only have 1 primary residence.
The Purchaser retains ownership and title to the home as long as he lives there. The unpaid Reverse portion accrues interest, and comes due when the homeowner sells or leaves the home. This would allow a Homeowner age 62 to purchase a home with cash of 45%. The other 55% is put on the Reverse Mortgage, and accrues interest. Taxes and Insurance are the responsibility of the homeowner.
Coastal North Carolina has always been a prime retirement haven for those from the Mid-Atlantic and Northeast seeking areas that are warmer and offer a lower cost of living, and is becoming more popular every year. The area from Wilmington NC, to Myrtle Beach SC, has little resemblance to the national housing market. Although the Oceanfront, higher priced foreclosures have increased, the lower priced, owner occupied homes continue to sell well and have maintained their values.
Brunswick County, NC which is located between Wilmington NC and Myrtle Beach, continues to be one of the fastest-growing counties in the nation. The proximity to Wilmington, a charming Southern Town located between the Cape Fear River and the Atlantic Ocean, and easy access to Myrtle Beach and all it has to offer in shopping, dining, and golf, make it an ideal landing spot for the retiree and empty nester that wants to downsize.
Now, with the new HECM Mortgage product, that transition can be done much more economically, allowing preservation of assets. Most of the relocating folks pay cash, doing so to avoid having mortgage payments. With this product, they can now purchase with less cash,allowing them to possibly leave retirement funds intact, if they so choose to do so. Having a home completely paid for was mainly desired to retire the payment. This product allows the purchaser to eliminate payments, while still providing equity that will continue to grow over time.
When the Home is sold, the Reverse Mortgage balance, plus accrued interest, is then repaid. The remaining equity belongs to the homeowner.
Wes Hudson is a Financial Counselor and Reverse Mortgage Specialist in Wilmington NC. His email address is SeniorReverseMortgages@yahoo.com, or WesHudson@ReverseMortgageNation.com. His website is http://www.ReverseMortgagesNC.com He can be reached at 910-262-4083
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