| With a home purchase, the HECM must be
the only lien against your new home, you must occupy the
home within 60 days from the closing date, it must be your
principal residence, any construction must be completed
(an occupancy certificate must be issued), co-ops and some
manufactured homes are ineligible, and there must be no
home flipping.
Proceeds from the HECM will be based on the lesser of
the sales price or the appraised value of the home you are
purchasing. And importantly, between the HECM proceeds and
your own funds, enough money must be available to purchase
the new home outright.
You may choose to provide a larger investment amount
in order to retain a portion of the available HECM proceeds
for future draws. This HECM 'Reserve' can be used
for a line-of-credit or for monthly income. A HECM line-of-credit
grows tax-free at the HECM's note rate plus half of one
percent.
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Allowable
funding sources |
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Sources
not allowed |
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Proceeds from
a HECM reverse mortgage |
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Bridge loans |
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Your savings |
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Cash withdrawn
from credit cards |
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Any funds from
the sale of an existing home |
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Subordinate liens |
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Lenders must verify
the source of all funds |
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Seller Financing |
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To find the amount of funds you
will need, answer these questions:
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