Reverse Mortgage Purchase Tampa FL

A reverse mortgage purchase makes it possible for seniors age 62 or older in Tampa Florida to purchase a new home with HECM loan proceeds. The key benefit to the senior is the purchase only requires one set of settlement costs vs. buying a property and obtaining a reverse mortgage afterwards, which will have two complete sets of closing costs. Developed by the Housing and Economic Recovery Act of 2008, this program became live on January 1, 2009. Qualified seniors must conform to all HECM requirements, all of the standard rules apply along with a few new rules and regulations.

What are the fundamentals to buying a home in Tampa FL with a reverse mortgage?

• Can buy existing 1 to 4 unit properties
• House must serve as primary residence
• Once HECM purchase is complete, no further liens are permitted (Financial institution in 1st position, HUD in silent 2nd)
• Will need to supply financial investment at closing from allowable funding source, see below for details
• Must live in house within 60 days of close of escrow
• Newly built homes need to have certificate of occupancy

There are a few variations between a HECM for purchase and a conventional HECM for seniors in Tampa Florida.

The major differences concern the properties types which are permitted, the cash needed at close of escrow, the involvement of a real estate professional in the mortgage loan process, the recommendations of a qualified professional house inspection, and certain closing costs.

Eligible Properties

Same as traditional HECM mortgages

Ineligible Properties
Cooperative units
Manufactured housing constructed prior to 1976 and without permanent foundation
Bed and breakfast properties, boarding houses

What’s the monetary investment requirement?

At close of escrow, HECM borrowers will need to provide a monetary investment that will be applied to satisfy the difference between the HECM principal limit and the sales price for the home, in addition to any HECM loan associated expenses that aren’t financed or offset by other allowed FHA funding sources. Basically, the proceeds from the reverse mortgage and any funds from the sale of the old home (or from the homeowner’s savings) needs to be enough to buy the new home outright.

The difference between principal limit and sales price for the house in Tampa includes any HECM loan related costs that aren’t financed or offset by other permitted funding source. Borrowers could provide a larger down payment amount to be able to keep a percentage of HECM proceeds for future draws.

What are allowed financing resources?

Borrower may use their personal funds or funds obtained from the sale of assets.
Withdrawals from consumer’s savings or retirement account are generally satisfactory.

Loan providers are going to be required to validate the source of all the money prior to closing. A verification of deposit, in addition to the most recent bank statement, may be used to verify savings and checking accounts. Whether there is a significant increase in an account, or the account was opened up fairly recently, the lender must get a legitimate explanation of the source of those funds. This type of documentation will have to be provided in the FHA case binder. Failure to produce the required documentation could lead to a notice of rejection and delay of endorsement.

Which funding resources are ineligible?

Gifts
Loan discount points
Interest rate buy downs
Settlement cost assistance
Home builder incentives
Home owner contributions or home owner financing
Credit card advances
Secured or non-secured loans from another asset (car, home equity)

Homeowners may not obtain a bridge loan (also referred to as “gap financing”) or engage in other temporary financing strategies to satisfy the financial investment requirement or payment of settlement costs necessary to close the purchase transaction. This limitation may include subordinate liens, unsecured loans, cash withdrawals from credit cards, seller financing along with other lending obligations that can’t be satisfied at closing.

What’s the Purpose of the Real Estate Agent When Buying A Home In Tampa?

Seniors in Tampa should consider a written contract – you need to include contingencies for the sale of the senior’s previous property, the property inspection, etc.

Selecting a Home for Purchase & Getting an Home inspection

All seniors are strongly encouraged by HUD to get a home inspection from a licensed certified home inspector (This is advised but is not mandatory)

Examines the physical condition: structure, construction, and mechanical systems
Identifies issues that ought to be repaired or replaced prior to the scheduled close of escrow date
Estimates the remaining practical life span of the key systems, equipment, structure, and finishes
Buyers should be at the inspection to ask questions regarding the condition and maintenance

Required Repairs

Health and safety or structural integrity issues
Need to be finished prior to closing by seller
Include in purchase agreement
Buyer can’t put any cash into repairs before they own the home

Writing an offer

Must Florida offer contingent on satisfactory inspection performed by qualified home inspector
Borrower might wish attorney to review – raises costs but can be worth it
Client may cancel transaction anytime before closing but this may affect earnest money deposit

Settlement Fees

Standard HECM closing costs plus:

Recording fees
Transfer taxes
Varies from Florida-to-Florida

Other things you need to know:

There is no three day right of rescission contrary to traditional HECM. The three-day right of rescission period isn’t applicable to HECM for Purchase transactions. As a result, all initial advances may be paid on the day of closing by the settlement agent. However, FHA encourages loan companies to seek their counsel’s opinion to assure compliance with Federal or Florida laws.
Seller concessions aren’t applicable to reverse mortgages.

Existing HECM borrowers who engage in a HECM for Purchase transaction are ineligible for a decrease in the upfront MIP and financial institutions will have to enter the transaction into FHA Connection as a new HECM.

HUD-approved housing counseling agencies which have been authorized to provide reverse mortgage counseling, must counsel those that anticipate utilizing the HECM for Purchase option on all topics covered in this Mortgagee Letter and other HUD requirements and issuances.
Mortgage companies are required to ensure the property, when utilized as collateral for the HECM, satisfies the following property requirements:

1) It is the borrower’s principal residence;

2) Construction is finished and a certificate of occupancy or its equivalent was issued;

3) Any construction loan financing for the house, which will serve as the collateral for the HECM loan, is satisfied and the HECM liens will be in a first and second lien position and, at the time of closing, no other liens against the house exist.