Guest column: New mortgage plan great idea for seniors
| Friday, Aug 14 2009 01:19 PM
Last Updated Friday, Aug 14 2009 01:19 PM
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Adoree Roberson
I am the owner of a local real estate company who recently decided to buy a new home. As an official senior citizen I found that, along with the many other changes that one experiences, the thought of buying a new home no longer filled me with excitement, but dread. The thought of being forced into one more long-term mortgage with the monthly ritual of payments was enough to make me reconsider my recent decision.
Suddenly, purchasing a new home had lost much of its allure. I was certain that there must be a better option. I contacted a friend in the mortgage business, and to my surprise and delight, he outlined a brand new FHA government insured program that sounded too good to be true.
In January, the U.S. Department of Housing and Urban Development announced its new Home Equity Conversion Mortgage Senior Home Purchase Program. The program can be used to either purchase a home, or to withdraw some of the equity in your home if it is owned outright or has a small mortgage balance.
As in my case, seniors (age 62 or older) who purchase a home through this program are required to make a one-time investment, which is calculated on the youngest borrower’s age and the price of the home.
The percentage can be from 32 percent to 50 percent. The investment includes all loan costs including a loan origination fee, closing costs, mortgage insurance premium, interest and servicing fees, which can be financed and paid from the proceeds of your loan. Financing the costs means you do not have to pay for them out of pocket.
This is the total expense for the borrower(s) with no mortgage payments as long as you live in the house.
At first I was concerned that the process would be cumbersome and require a never-ending list of documentation. Not so. The application required the usual signing and copying of identification, assuring the lender that this would, in fact, be my primary residence, and answering questions about the property.
When the application was complete I was asked to take a counseling session, by appointment, over the phone. It is required by HUD to ensure the program you are about to take part in has been has been explained.
From here, the mortgage company ordered an appraisal of the home and completed the package for underwriting.
Soon after we received final approval from underwriting, I met the loan officer and the notary at the title company. Final papers were signed, and I was a proud new homeowner!
From the signing date of the documents until I either sell the house or die, I will never make a mortgage payment. My heirs can either refinance the house or sell it. Any money over and above the repayments of the loan is theirs.
The house will always be deeded in my name and I am free to handle the mortgage as I would with any financing. Repayment can be made at any time with no repayment penalty.
My total financial responsibility to my home comes down to paying the taxes, insurance and maintenance. This is a great plan that creates a bright future for seniors!
For more details on the program, visit the Bakersfield Association of Realtors website at www.bakersfieldrealtor.com or call 1 (800) 209-8085.
— Adoree Roberson is owner/manager of Roberson Real Estate.
