Effective January 1, 2009 the HECM for Purchase will be available to seniors. HECM stands for “Home Equity Conversion Mortgage.”

Seniors will still need to meet the requirements of a regular HECM refinance.  They must be 62 years of age, complete the 3rd party counseling requirement and own the home as their primary residence.  The formula for calculating the purchase loan to value will remain the same; property value, age of the youngest borrower and the current interest rate.    Here are a few key points specific towards the purchase program.

• Borrowers must occupy the property within 60 days from the date of closing and a certificate of occupancy on a new build must be obtained.
• At closing, HECM borrowers must provide a monetary investment which will be applied to satisfy the difference between the HECM principal limit and the sales price for the property, plus any HECM loan related fees that are not financed or offset by other allowable FHA funding sources.
• Lenders will be required to verify the source of all funds prior to closing.  A verification of deposit, along with the most recent bank statement, may be used to verify savings and checking accounts.
• A three-day right of rescission period is not applicable to HECM for purchase transactions.

As always, if you have any questions please feel free to contact me at 720.641.3482 or kbarton@1strmusa.com.