Florida Reverse Mortgage Myths: Separate Facts from Fiction

Myth #1: The Lender will own my Home

False - You and your family or your estate continue to own your home even after obtaining a reverse mortgage. Just like a regular mortgage, the lender does not take control of the title. The lender's interest in your home is limited to the outstanding loan balance.

Myth #2: I will be required to make monthly payments on the reverse mortgage.

False – You are never required to make monthly mortgage payments with a Florida Reverse Mortgage. As the borrower you are responsible for payment of property taxes, insurance, and general upkeep of the home and nothing more. As long as these payments are made, no payments are due on the mortgage as long as you continue to reside in your home.

Myth #3: My children will be held responsible for repayment of a reverse mortgage.

False - A Florida Reverse Mortgage is a non-recourse loan. This means that the lender can only derive repayment of the Reverse Mortgage loan from the proceeds of the sale of the property. Even if a catastrophe strikes and the value of the home is reduced, you or your estate can never owe more than the value of the home. Although your heirs will not be responsible for repayment of the loan, they will have the option of repaying the loan and keeping the house for themselves.

Myth #4: You need a certain level of income, credit, or health to qualify

False - A Florida Reverse Mortgage has no income, credit, or health requirements

Myth #5: To qualify, my home must be debt free and paid off "Free & Clear"

False - You may have an existing mortgage or other debt on your home. The mortgage or debt, however, must be paid off first with the proceeds of the Florida Reverse Mortgage. In fact, many people get a reverse mortgage just for this reason: to get rid of their monthly mortgage payments forever.

Myth #6: If I do a reverse mortgage, I will have nothing for my kids

False – If, upon your death, your heirs decide to sell your home to pay off your Florida Reverse Mortgage, the remaining proceeds from the home would pass to your heirs or your estate. Only the outstanding balance of the Reverse Mortgage would go to the lender.

Myth #7: If I get a reverse mortgage, I cannot sell my home

False - If you decide to sell your home, your Florida Reverse Mortgage is like any other loan that must be paid off at closing. There are no restrictions on prepayment or penalties for paying off your loan or selling your home.

Myth #8: My Social Security, Medicare/Medicaid benefits will decrease

False - Generally the money from a Florida Reverse Mortgage is considered a conversion of your equity into cash and not considered income. However, if you receive a lump sum payment from a reverse mortgage, any amount retained the month after you get it would count as a resource and could affect Medicaid eligibility. Please consult with an advisor or your tax advisor or attorney for more information.