Senior Reverse Mortgage

A Reverse Mortgage is a loan for homeowners over 62 years of age that would like to convert part of the equity in their home into cash.

APPLY FOR A REVERSE MORTGAGE

Senior Reverse Mortgages were conceived as a means to help people during retirement with everyday living expenses, to pay for health care, pay off debt or remove the existing mortgage payments of the traditional mortgage. With a reverse mortgage, you will always retain ownership of your home as long as you or your spouse lives in it as your primary residency. The funds from a reverse mortgage are non-taxable and can be utilized in any way you see fit. The cost of a reverse mortgage can be paid out of the proceeds so typically there are very few out-of-pocket expenses. 99% of all senior reverse mortgage loans are backed by the Federal Housing Administration or FHA.

Requirements for Reverse Mortgage in Florida:

All borrowers listed on the title must be over the age of 62 years. A husband or wife with a spouse younger than 62 may obtain a reverse mortgage, but the name of the younger spouse must come off the title
The senior reverse mortgage must be your primary lien so any existing traditional mortgages must be paid off at the time of the reverse mortgage closing
You must remain current at all times on your property taxes and insurance.
FHA approved Condos are permitted for a reverse mortgage
You must keep your property as a primary residence and always keep the property under good maintenance

Misconceptions About Reverse Mortgage:

You can never lose or be forced out of your home as long as you maintain residency at the property
Social Security and Medicare are not affected by obtaining a reverse mortgage
The proceeds of a Reverse Mortgage are not taxable, you receive the full amount you are eligible for minus closing costs
There are no large out-of-pocket expenses- typically you will only pay for an appraisal of the home and 3rd party HUD counseling. These fees are minimal and there are programs for low-income homeowners to have this waived

Types Of Senior Reverse Mortgages

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Home Equity Conversion Mortgage

HECMs are the most common type of reverse mortgage, and you can spend the money you get from a HECM on anything. HECMs are also government-backed up to $726,525. Because of this, you may want to seek out a proprietary reverse mortgage if your home is worth more than $726,525. Because they are insured by the government, there are a few additional qualifications you need to meet to get a HECM. Because these are the most common types of a reverse mortgage loan, we will focus on the HECM for the remainder of this article.

Proprietary Reverse Mortgage

A proprietary reverse mortgage is a reverse mortgage issued by a private lender. If you have a high-value home, you may need to take a proprietary loan to get a reverse mortgage.

Frequently Ask Questions

If you have a question that deals with clients, customers or the public in general, there is bound to be a need for the FAQ page.

What are the Pros Of A Reverse Mortgage?

As with any big financial decision, it is important to weigh reverse mortgage pros and cons to make sure it’s the right option for you. Here are a few to get you started.
A reverse mortgage can offer several benefits:
You get to remain in your home and your name stays on the title.
You can access your home’s equity without selling your home or making monthly mortgage payments.
Reverse mortgages are immune from declining home values because they’re nonrecourse loans. Nonrecourse loans don’t allow the lender to take more than the collateral (your home) to restore your debts. Therefore, you’ll never owe more than what your home is worth.

What are the Cons Of A Reverse Mortgage?

Reverse mortgages aren’t for everyone. The loan comes with a number of drawbacks that you might want to consider before you get one:
Reverse mortgages decrease the amount of equity you have in your home.
Your loan balance will increase if you don’t pay down your interest over time.
You may outlive your loan’s benefits if you don’t choose the monthly tenure payout method.
A reverse mortgage can make it more difficult for your heirs to benefit from the equity in your home after you pass away.

What Can You Do With Reverse Mortgage Money?

You can use this money for anything, including supplementing your finances during retirement. While every situation is different, a few ways others have used a reverse mortgage include:
Lowering monthly mortgage payments
Increasing monthly cash flow
Consolidating debts
Paying for in-home care
Making home improvements
Supplementing income
Creating an emergency fund
Protecting home equity from declining markets

You may choose to put your funds into a line of credit that you can access whenever you need it. This is similar to a traditional home equity line of credit, with some key differences. For example, you aren’t required to make payments on the loan, and as long as you stay in the home and uphold your financial obligations of the loan, a reverse mortgage line of credit cannot be suspended or called due. One of the biggest advantages of a reverse mortgage line of credit is that any unused funds increase in value over time, giving you access to more money in the future.

What Do You Have To Pay With A Reverse Mortgage?

As with most loans, there are closing fees and ongoing costs associated with a reverse mortgage. Before you get a loan, you’ll need to attend reverse mortgage counseling, which will be an out-of-pocket expense for you. There will also be a few upfront costs, including origination fees, a mortgage insurance premium and closing costs. Lenders also add monthly fees and interest to the amount you will owe back. As your debt accumulates, your home equity shrinks. As stated above, you still need to pay property taxes and homeowners insurance while you live in the home. You’re also obligated to maintain the condition of the home and cover maintenance costs. These are important obligations to remember because you could lose your home to foreclosure if you fall behind on property taxes or let your home deteriorate.

Can You Sell Your Home With A Reverse Mortgage?

You may still sell your home if you have a reverse mortgage. However, you must pay back the debt you’ve accrued after you sell your home. Before you list your home for sale, contact your reverse mortgage lender and confirm the amount you owe. You may keep the remainder and put it toward a new home if your home sells for more than your appraised value. If your home sells for less than what’s owed on the loan, you won’t be responsible for paying the difference. You’ll never pay more on the loan than the value of your home.

You may wish to leave your home to your children or other relatives after you pass away. A reverse mortgage can make this difficult because you accept a lien on your home. A lien is a bank’s legal claim to an asset – your home. In other words, the bank has the first claim on your property once you’re gone from the home. However, your heirs do have a few options. They can pay off the debt you owe by purchasing the home for the amount owed or for 95% of the appraised value – whichever is less. This can be done by paying on their own or refinancing the loan into a regular mortgage. They can sell the home and pay back the lien with the proceeds. If the home sells for more than it’s worth, they can keep the remaining money. If it sells for less than what’s owed, they won’t have to pay the difference.

Finally, they can allow the home to go into foreclosure. The decision your heirs make will usually depend on how much equity is in the home. You shouldn’t take a reverse mortgage if leaving your home to your heirs is a high priority for you.