Cliff AuerswaldPresident, All Reverse Mortgage, Inc. · President at All Reverse Mortgage, Inc. (ARLO™) NMLS#14041 Company NMLS #13999

Real life examples of HECM for purchase (PART 2)

22 Dec 2023 · 1 min

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In this segment, the speaker explains how reverse mortgages, specifically Home Equity Conversion Mortgages (HECM) for purchase, enable fixed‑income retirees—particularly baby‑boomers who prefer larger, newer homes—to upsize without taking on a traditional mortgage. He illustrates the process with a numeric example: a homeowner who fully owns a $200,000 house can sell it, use the proceeds as a 50% down‑payment on a $400,000 new‑construction home, and finance the remainder through a reverse mortgage, thereby avoiding monthly mortgage payments. The discussion highlights the demographic trend of retirees seeking bigger homes and lifestyle amenities (e.g., golf, RVs) and why the reverse mortgage product is attractive for this group.

Chapters

A lot of folks might think that if you're taking a reverse mortgage, you might be downsizing in life, and that may be true for some segment of the demographic, but we actually are seeing a lot of baby boomers that they don't downsize. So in their young 60s, they're still wanting bigger homes, and they love toys still, and, you know, maybe the RVs and golfing communities. So we have done many transactions to where I might have a somebody who has like, say, a $200,000 home that is owned outright, and by selling that house, they're end goal, they want to get to the golf course, and those homes are brand new construction, maybe $400,000. Well, without taking on any new financing, so you can sell your house that's, say, $200,000, and your down payment requirement might be 50% on the new purchase. So they can get themselves into an upsized position without having to take on the burden of a traditional mortgage payment. These are fixed income retirees, and that's why the reverse mortgage is so appealing.