NewStyle Communities is all about giving you peace of mind when it comes to your new home purchase. We offer maintenance-free homes in the most beautiful areas of North and South Carolina. You can enjoy carefree living as you step into the next phase of your life while having a home that’s built for everlasting comfort. In addition to the excellent quality of homes and superb locations, there are other ways we try to make your move the best it can be. One way is our financing options.
Regardless of how you choose to purchase your home, we’re here to help you choose which financial plan is best for you. Today, we’d like to discuss a financial option that many of our homeowners have taken advantage of to bring them financial peace of mind and save them thousands. It’s called an HECM.
1. What Does HECM Stand For and What is it?
HECM stands for Home Equity Conversion Mortgage. The HECM for Purchase is a mortgage program for those aged 62 and better. It’s insured by the FHA (Federal Housing Administration), so it’s a safe way to finance your home. This government-insured program allows you to defer monthly payments and the loan balance increases over time.
2. How Does the HECM Program Work?
The best way to explain how the HECM Program works is through an example. For instance, you buy your dream home using an HECM loan and then decide to sell your home after 10 years. You then sell the home and receive 100% of the net proceeds after paying off the loan balance at the time of the sale.
You might think this is exactly how a traditional mortgage works, which is true! The main difference is that you don’t have to make monthly payments. The second is that you can receive the net proceeds in 3 different ways: a line of credit, in monthly payments, or a lump sum payment.
3. What Are the Benefits of Financing with an HECM?
There are two main benefits to using an HECM.
The first benefit is for you during your living years. As mentioned above, with this type of loan, you do not have to make monthly payments to a mortgage company. Therefore, you’ll have some extra money left over in your monthly budget, and who couldn’t use a bit of extra cash flow?
The second benefit is for your heirs after your passing. If your loan is greater than the value of your home when you pass away, an HECM mandates that neither you nor your heirs are personally liable to cover the difference if your home is sold for a loss. Heirs can sell the home, purchase the home, or sign the deed over to the lender and walk away. This is different from a traditional loan that forces them to sell the home at a loss and cover the difference.
4. Is the HECM Finance Options Right For Me?
We’ll always work with you to figure out what the best financing option would be for your specific situation. But if you’d like to see what the possibilities are for you using an HECM loan, you can review our special Matrix on our financing page by clicking this link. Use the chart to match your nearest age and then to the nearest expected purchase price of your new home to see what your required down payment would be.
You can also contact us to learn more. In the meantime, browse our website to view our homes and find the one you love. Let us know if you have any questions by reaching out to us online or giving us a call!