Can I Use a Reverse Mortgage to Purchase a Home?

As mortgage advisors at Residential Lending, a leading provider of lending solutions in the state of Colorado, we often get asked the question, “Can I use a reverse mortgage to purchase a home?” The short answer is yes, but there are a few important factors to consider before making this decision.

What is a Reverse Mortgage?

A reverse mortgage is a type of loan that allows homeowners 62 or older to convert a portion of the equity in their home into cash. This can be a great option for retirees looking to supplement their income or pay for unexpected expenses. However, a reverse mortgage can also be used to purchase a new home.

How do I use a reverse mortgage for a home purchase?

The most common way to use a reverse mortgage to purchase a home is through a HECM for Purchase. This is a specialized reverse mortgage product that allows the borrower to purchase a new home and obtain a reverse mortgage in one transaction. The proceeds from the reverse mortgage can be used to pay for the down payment and closing costs on the new home. This can be a great option for retirees who want to downsize or move to a different location without having to worry about making a large down payment.

Before deciding to use a reverse mortgage to purchase a home, it is important to carefully consider your financial goals and the overall impact on your retirement plans. It’s best to consult with a trusted mortgage advisor like the team at Residential Lending LLC who can help you understand the pros and cons of this decision. You can also use our Colorado mortgage calculator to get an idea of how much you may be able to borrow.

At Residential Lending, our team of experienced mortgage advisors is dedicated to helping you make the best decision for your financial future. Contact us today to learn more about our residential lending solutions and to find out if a reverse mortgage is the right choice for you.

For questions or comments, connect with us on Instagram, Facebook, and TikTok.