A HECM can be used to purchase a property.

A HECM can be used to purchase a property.

• A. True
• B. False
• C. Only with a separate loan
• D. Only for existing properties

Answer: (A)

A HECM can be used to purchase a property through a program called HECM for Purchase. This option lets a borrower who is 62 or older buy a primary residence and fund part of the purchase with a reverse mortgage instead of a traditional forward loan. At closing, the price of the home must be covered by the combination of the HECM loan amount and the borrower’s own down payment (plus any required closing costs). The borrower doesn’t make monthly mortgage payments; instead, the loan is repaid later when the borrower dies, sells, or moves out of the home. The loan is FHA-insured and non-recourse, meaning neither the borrower nor heirs are personally responsible for more than the home’s value if the loan balance exceeds it. The home can be a newly constructed property or an existing one, as long as it will be the borrower’s primary residence. This makes using a HECM to purchase a property a legitimate option, not limited to using a separate loan or to buying only existing homes.

A HECM can be used to purchase a property through a program called HECM for Purchase. This option lets a borrower who is 62 or older buy a primary residence and fund part of the purchase with a reverse mortgage instead of a traditional forward loan. At closing, the price of the home must be covered by the combination of the HECM loan amount and the borrower’s own down payment (plus any required closing costs). The borrower doesn’t make monthly mortgage payments; instead, the loan is repaid later when the borrower dies, sells, or moves out of the home. The loan is FHA-insured and non-recourse, meaning neither the borrower nor heirs are personally responsible for more than the home’s value if the loan balance exceeds it. The home can be a newly constructed property or an existing one, as long as it will be the borrower’s primary residence. This makes using a HECM to purchase a property a legitimate option, not limited to using a separate loan or to buying only existing homes.