Closing the price gap: Reverse-purchase mortgage can make difference between retiring here or out-of-state
Home prices have skyrocketed around Denver, and no experience will give you a clearer picture of that than trying to purchase a ranch plan for retirement. “It’s almost impossible to keep up with the market these days,” says Senior Real Estate Specialist Sue Merich with RE/MAX Alliance.
“I used to sell houses here under $100,000.”
At a moment when the median-priced singlefamily home in the metro area sells for $510,000, residents reaching for ranch plans are having to get creative to close the price gap between what their older home yields and what a new one runs.
Reverse for purchase
“We’re seeing more buyers now that are using reverse mortgages as a tool to get the new home they need, rather than to refinance their older place,” says Larry Armstrong with Reverse Mortgage Funding—RMF.
Two weeks ago, Armstrong and Merich joined forces to help one of her clients purchase a new ranch by D.R. Horton in Brighton Crossing. The buyer and her husband, longtime Adams County residents, had made a move to Texas in 2019, but he had passed away during the move. When his wife sold the Texas home to return to be closer to her Colorado kids, she found that the proceeds from the Texas sale weren’t nearly enough to get the size and quality of home in Colorado that she wanted.
“In the year-and-a-half, prices here went up so much that she couldn’t have bought,” says Merich.
Armstrong rode to the rescue—getting Merich’s client pre-approved for RMF’s Reverse Mortgage for Purchase program, available to age-62-plus buyers. The Home Equity Conversion Mortgage for Purchase (H4P) delivered 58.7% of the home’s $485,000 price tag, including numbers of nice upgrades.
With the reverse mortgage figured in, the buyer had to invest only 41.3% of the purchase price. She kept $142,000 in new retirement savings, and she needn’t make another mortgage payment—ever—unless she chooses to. She will continue to pay real estate taxes and homeowner insurance and maintain the property while living there.
“Reverse mortgages are a wonderful idea, to have that extra money while never having to make a payment,” says Merich, who has done numbers of them for clients, including two with Armstrong’s purchase programs.
Armstrong adds that reverse mortgages are now better than ever, given FHA’s increased qualifications that assure they are a safe and secure loan for the borrower and their heirs. He and team members Hans Fedge and Nathan Johnson can tell you more about how those work— 303-875-7808—or visit their site, HECMCO.com.
“Reverse mortgages are a wonderful idea, to have that extra money while never having to make a payment.”