Ann Tubbs and Ehtesham Majid left behind their house in Moraga more than
two years ago to enjoy the urban lifestyle of San Francisco. The
retired couple ended up renting a place in the city but eventually
hoped to buy a home, a place they could personalize and make their own.
ß Now, a new program made possible by federal legislation passed last
year to address the foreclosure-driven housing crisis is also helping
seniors use a reverse mortgage to help buy a home, provided they can
come up with a large down payment. Before the Home Equity Conversion
for Purchase program rolled out in January, seniors 62 years and older
could only use reverse mortgage loans to draw out tax-free payments
from the equity held in an existing home while continuing to live in
it.
Tubbs and Majid used the new program to help purchase a $625,000
two-bedroom condominium located downtown near the city’s waterfront.
“We like city living. We like to walk around at night and look in
windows,” said Tubbs, who retired from a 30-year-career at Planned
Parenthood. She and her husband moved into their new home in August.
“It’s a great program for people like us. We don’t have any children
and want the urban lifestyle,” said Majid, a retired software engineer.
Many lenders are starting to offer these new loans in addition
to traditional reverse mortgage products. But as with traditional
reverse mortgages, there are costs involved that can add thousands of dollars to the loan amount,
which grows over time and has to be repaid after the last borrower
leaves or sells the property or dies and the home is passed on to
heirs.