Seniors planning for retirement are often faced with the fact that their family home may not be appropriate for them to age in place. Whether the home is simply too large to maintain, or the location is too far from family, it could make sense to downsize.
Home Buying with Safety in Mind
Downsizing provides the opportunity for retirees to find a home in a senior community and/or to afford the renovations needed to age in place. From wheelchair accessible ramps to front loading washer and dryers, a reverse mortgage could help seniors purchase or renovate a home with their long-term safety in mind.
Typically, the larger the home the more effort may be required to maintain. By downsizing you can slash time spent on cleaning, decrease your utility bills (while increasing your discretionary funds), and reduce traveling long distances to visit family and friends by potentially moving closer to them. This leaves more time to prioritize what you actually care about in retirement.
What to consider before downsizing:
- Cost: Determine the costs associated with renovations versus buying a new home
- Size: Consider if your current home is too big for your needs
- Location: Assess the proximity to friends and family
- Healthcare: Accessible healthcare options
- Transportation: Nearby public transportation or ease of traffic
- Climate: Preparedness for extreme weather scenarios
Downsizing with a Reverse Mortgage
If you decide that downsizing or buying a new home is a better solution, you have many options. If you are at least 62 years old, the Home Equity Conversion Mortgage (HECM) for Purchase loan may help you buy your next home without having monthly mortgage payments.1 The HECM for Purchase is a Federal Housing Administration (FHA) insured2 reverse mortgage that allows senior homeowners to use the equity from the sale of a previous residence to buy their next primary home in one transaction. Regardless of how long you plan to live in the home, or what happens to your home’s value, you only make one initial investment (down payment) towards the purchase.
A HECM for Purchase loan may help:
- Eliminate existing monthly mortgage payments1
- Increase your purchasing power
- Pay less up-front investment than a cash purchase
- Right-size to a smaller, lower maintenance home
- Buy a home closer to family or friends
- Lower their cost of living during retirement
- Enjoy carefree living in a senior housing community
Are you interested in learning how to use a reverse mortgage to downsize in retirement? Call (800) 976-6211 to speak with a licensed reverse mortgage specialist to see how much you may qualify for.
1 Your current mortgage, if any, must be paid off using the proceeds from your HECM loan. You must still live in the home as your primary residence, continue to pay required property taxes, homeowners insurance, and maintain the home according to FHA requirements. Failure to meet these requirements can trigger a loan default that may result in foreclosure.
2 As required by the Federal Housing Administration (FHA), you will be charged an up-front mortgage insurance premium (MIP) at closing and, over the life of the loan, you will be charged an annual MIP based on the loan balance.