Florida Reverse Mortgage Questions and Answers

What is a reverse mortgage?

Florida Reverse Mortgages are home loans that allow you to convert a portion of the equity in your home into cash. The equity that you built up over the years can be paid to you in a variety of ways. One of the main benefits of a reverse mortgage is, unlike a traditional home equity loan or second mortgage, no repayment of principal or interest is required until the borrower(s) no longer use the home as their principal residence. You can also use a Florida Reverse Mortgage to purchase a primary residence if you are able to use cash on hand to pay the difference between the reverse mortgage proceeds and the sales price plus closing costs for the property you are purchasing.

Can I qualify for a reverse mortgage?

Eligibilty for Florida Reverse Mortgages is simple:  all owners of the home must be 62 years of age or older, you must own your home outright or have a low mortgage balance that can be paid off at closing with proceeds from the reverse loan, and you must live in the home as your primary residence. Before you apply for a  Reverse Mortgage, you must contact a HUD-approved counselor and attend a brief counseling session either by phone or in person.  Once you complete your counseling, you will recieve a counseling certificate that you must bring to your lender. Please feel free to contact us at (800) 320-4001 for the names and telephone numbers of HUD-approved counseling agencies within your area.

What types of homes are eligible?

Single family homes, or 1-4 unit homes where one unit is occupied by the borrower are eligible for a Florida Reverse Mortgage.  In addition, FHA-approved condominiums and manufactured homes that meet FHA requirements are also eligible.  We'd be happy to tell you if your condominium has been FHA-approved or help you determine if your manufactured home meets FHA requirements.  

What's the difference between a reverse mortgage and a home equity loan?

Home equity loans, often called Second Mortgages, and Home Equity Lines of Credit (HELOCs) require good credit and monthly repayment. A Florida Reverse Mortgage does not require repayment as you continue to live in the home as your primary residence and continue to pay your taxes and homeowners insurance.  In addition, you generally do not need to provide evidence of income to qualify for a Florida Reverse Mortgage nor is there a credit requirement associated with a Reverse Mortgage.  To qualify, in most cases, you just need to be 62 or older, own significant equity in your home and live in the home as your primary residence.  The amount you can borrow depends on your age, the current interest rate, and the appraised value of your home or FHA's mortgage limits, whichever is less. Generally, the more valuable your home is, the older you are, the lower the interest, the more you can borrow.  Like all homeowners, you still are required to pay your real estate taxes, insurance and other conventional payments like utilities.

Can the lender take my home away if I outlive the loan?

No. You can't really "outlive" a reverse mortgage.  The loan does not become due as long as one of the borrowers continues to live in the house and keeps the taxes and insurance current. You can never owe more than the value of your home at the time you or your heirs sell the home.  In other words, the loan is totally "non-recourse" to the borrowers.  The repayment of the loan is based solely on the value of the home at the time the loan comes due.   Any remaining money after selling the home would go to you or your heirs.

Will I still have an estate that I can leave to my heirs?

In most cases, yes.  When you sell your home, you or your estate will repay your loan balance to the lender. The remaining balance, if any, belongs to you or to your heirs.  Because you are only allowed to borrow a portion of your equity, in most cases your loan balance will not exceed your homes value, so there will be equity left to leave to your heirs.

How much money can I get from my home?

There are three main factors that determine how much you can borrow on a Florida Reverse Mortgage:  the age of the youngest borrower, the current interest rates available on the Reverse Mortgage and the lesser of the appraised value of your home or current FHA limits.   For the most accurate estimate of how much you can borrow, please contact our office at (800) 320-4001 or fill out our free evaluation request.

How do I receive my payments?

In addition to a lump-sum distribution, you have five additional options:

• Tenure - the borrowers receive equal monthly payments as long as the youngest eligible borrower lives and and continues to occupy the property as a principal residence.  The amount of the tenure payment is based upon the life-expectancy of the youngest borrower.
• Term - the borrowers receive equal monthly payments for a fixed period of months as chosen by the borrowers.
• Line of Credit - you withdraw at times and in amounts of your choosing until the line of credit is exhausted.  Any unused portion of the line of credit would grow at a defined rate.
• Modified Tenure - the borrowers select a line of credit and receive tenure payments based on the remaining balance available beyond the line of credit.
• Modified Term - the borrowers receive a line of credit plus fixed monthly payments for a period of months selected by the borrower.