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Can you use a reverse mortgage to purchase a home?

Can you use a reverse mortgage to purchase a homeCan you use a reverse to purchase a home? This is a question we are often asked. The short answer is that it would be a rare circumstance that purchasing a home with a reverse mortgage would be the best financial alternative. The closing costs, as more fully discussed in other sections of this website, would likely be very high. Unlike a refinancing, the closing costs cannot be paid by the lender, thus the borrower would have to pay both the large down payment and the high closing costs.

A better strategy would typically be to purchase the home with a traditional mortgage, and structure the transaction so the lender pays most of the closing costs on that purchase. This is a common practice, and will save you a significant amount of money.

Once the purchase is complete, then you may refinance using a reverse mortgage and have the rebate pay for the high closing costs as with the standard purchase loan. Although this is a cumbersome extra step, the out-of-pocket savings will likely be very significant, often thousands or tens of thousands of dollars.

Interested in learning more? Please request a free consultation and we’ll help you determine if a reverse mortgage is right for you.

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DS Consulting
15281 Weeks Dr.
La Mirada, CA 90638
Phone: 562-902-2677

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Dennis Sanchez
NMLS #281480
BRE #01179128
California CPA #34077 (inactive)
DS Consulting
NMLS #793097
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