Can 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.
