Inside the Reasons Why Seniors Choose the HECM for Purchase

Lifestyle, ease of upkeep, and proximity to family are main criteria for seniors who choose a Home Equity Conversion Mortgage for Purchase loan, many originators agreed.

Christina Harmes, assistant manager for C2 Reverse in San Diego, said she has clients looking to upsize, downsize, move to the city or relocate to the country, but most of them have one shared prerequisite.

“I was looking for the common thread and it seems to be family,” she said, giving examples of borrowers looking to be closer to grandkids — or even searching for homes where their aging parents can live with them.

Because people are living longer, retirees of today are healthier and seemingly younger than the seniors of other generations, according to John Leer — a reverse mortgage officer at KleinBank in Chanhassen, Minn.

“A lot of seniors are different from the seniors 13 or 14 years ago,” he said. “They might be moving to Florida or closer to friends and family.”

Tim Linger, owner of HECM Senior Home Financing in Orlando, Fla., said that his clients are looking to leave houses that are no longer suitable for their lives.

“When it comes to Florida, it’s all about purchasing a retirement home,” Tim Linger said. “It’s not about upsizing or downsizing. It’s about right-sizing and lifestyle, which might be moving near a pool or golf course.”

And of the right-sized homes, many of those on seniors’ wish lists are newer with lower maintenance demands, Linger said.

Leer agrees, adding that many times it is a single-level home where owners will not need to “shovel driveways or mow the grass.”

As for why borrowers eventually choose a HECM for Purchase over traditional mortgages, it typically comes down to less financial strain and more cash flow. Because these non-traditional mortgages allow borrowers to purchase a home with only half down and no mortgage payments, they can be very attractive to retirees.

“When we present the option with no mortgage payments, you can see relief wash over them,” Harmes said, adding that many times ,the borrowers are not familiar with H4P.

Leer added that every HECM for Purchase he originated in the last five years has been with people who had no idea about the program prior to their purchase.

Written by Maggie Callahan

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