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What Is a Reverse Mortgage & How Do They Work in Florida

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Are you a senior living in Florida and looking to bolster your post-retirement financial planning? A reverse mortgage can provide a practical and cost-effective solution. 

A reverse mortgage is technically a lending instrument, but it differs from a traditional mortgage loan. It enables residential property owners who are 62 years of age or older to transform some of their home equity into cash. It can appeal to people who want to supplement their retirement funds, pay off credit card debt, take a vacation or fund any other purpose.

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How Does a Reverse Mortgage Work in Florida?

As a Florida homeowner, you can use a reverse mortgage to borrow money using your primary residence as security. It can serve as a sensible financial tool by providing a lump sum to manage expenses or meet other needs or obligations. 

The “reverse” terminology means you receive money from the lender instead of sending regular monthly payments. You don’t have to worry about repaying the loan — this typically occurs after you pass away or if you sell your home at some point.

Everything You Should Know About Florida Reverse Mortgage Loans

At Senior Lending Corporation, we have extensive experience in helping Florida homeowners like you understand a reverse mortgage and how you can benefit from it. For instance, did you know that this loan type is advantageous for HECM and FHA-insured plans rather than non-HECM mortgage options? We’ll also explain how a reverse mortgage can support your current retirement planning program.

Who Is Eligible?

If you’re considering a Florida reverse mortgage as a financial plan, please note the following eligibility criteria as one of the reverse mortgage basics.

Florida Reverse Mortgage: The Key Factors for Eligibility

If you’re considering Florida reverse mortgage as a financial plan, please note the following eligibility criteria as one of the reverse mortgage basics.

  1. At least one homeowner must be 62 or older. Learn more about the age requirements
  2. The home must be owned and your primary residence. Learn more about eligible properties
  3. Minimal income and credit requirements

Newly elected government continues to strengthen the rules and regulations for HECM mortgages to protect seniors. Also, new research continues to pave the way proving that the HECM used wisely can be used in an overall retirement plan to enhance the longevity of assets.

Can You Buy or Sell a House With a Reverse Mortgage?

Aside from the fact that the lender is paying you instead of the other way around, a reverse mortgage works similarly to a regular mortgage when it comes to handling the property itself.

Just like with a traditional mortgage, you’re welcome to sell your home and buy a new one without penalty. You’ll have to pay off the rest of the loan plus interest and fees at this time, so the lender can close the account.

Usually, one uses the proceeds from the sale to pay off their loan.

Who Owns the House in a Reverse Mortgage?

Again, these rules are similar to any other mortgage. You are the homeowner of your Florida home as long as the loan is in place. The loan does not transfer title, property or equity — it all stays with you.

How Does a HECM Loan Work Under Different Property Types?

For your property to qualify under the FHA’s HECM Reverse Mortgage scheme, your home must fall under the below-mentioned categories:

  • Single-family residences
  • Have a minimum of 1-4 unit homes
  • It should be permanently affixed to an FHA-approved foundation
  • Homes that are double or triple-wide manufactured and built after 1976
  • Must be FHA-approved townhomes or condominiums
  • The property must be owner-occupied

Properties that Cannot Utilize a Reverse Mortgage

When considering a HECM Reverse Mortgage Loan, remember that not all properties are covered under this scheme. The HECM Reverse Mortgage does not cover:

  • Vacation homes
  • Second homes
  • Rental homes
  • Mobile homes
  • Cooperatives or co-op structures

The only exception made here is for rental homes, where a HECM Reverse Mortgage can be availed if the rental space is a multi-unit home or residence, and the homeowner has occupied at least one of the said units.

Learn more about property types that are eligible for reverse mortgages.

Loan Options

There are three types of reverse mortgages:

  1. HECMs, or Home Equity Conversion Mortgage: This is the most common type of reverse mortgage, insured and backed by the Federal Housing Administration (FHA). About 95% of all reverse mortgages are HECMs, and much of the information you’ll find about reverse mortgages apply specifically to them. Review the pros and cons of HECMs here.
  2. Jumbo reverse mortgage or proprietary reverse mortgage: These are private loans for high-value homes with little to no mortgage left.

You should understand a few key details about the loan, so you don’t run into trouble in the future.

Maximum Loan

When you start looking into reverse mortgage loans, you may wonder how much money you can get from a reverse mortgage. The answer to that depends on a few things, including your age, the type of home you have, the property’s appraised value and your property’s location. Generally speaking, you’re likely to get more money if you’re older and have a more expensive home with lower rates.

Learn more from a licensed advisor here or speak to an expert on the phone at 800-822-1190.

Reverse Mortgage Payoff Options

A reverse mortgage is still a loan, and it needs to be paid back. There’s no set time in which you’ll have to pay it back. Instead, repayment is triggered when the last surviving borrower:

  • Sells their house
  • Makes another home their primary residence
  • Passes away

The most common reason of the ones above is that the borrower dies. It then falls to the estate and heirs to repay the loan, which they have up to 12 months to repay. You can often take care of repayment simply by selling the home. Lots of contracts include a stipulation that even with interest, repayment cannot exceed the house’s appraised value for this exact reason. However, this is only true for HECM loans, which make up most reverse mortgages. Other repayment options could be:

  • Refinancing the mortgage: Just like you could turn your mortgage into a reverse mortgage, the reverse can also happen.
  • Taking out a new mortgage: You can also take out a completely new mortgage to pay off the remaining balance.
  • Providing a deed in lieu of foreclosure: If the lender decides to try and foreclose the property, you can give them the deed to the home so it doesn’t have to go into foreclosure.

Avoiding Reverse Mortgage Scams

A reverse mortgage can be an excellent option for many reasons, but you should beware of speaking with people who seem pushy about getting you to invest in one. The most common way you might see this is through contractors who request you get a reverse mortgage to pay for home repairs and maintenance. In this case, the loan may not be in your best interest.

If you’re a veteran, watch out for offers that claim to be sponsored by the Department of Veterans Affairs. The VA does not offer reverse mortgage loans, and in the case of reverse mortgages, deals for veterans are often a way to appeal to older Americans who are desperate to stay in their homes.

There’s no rush for getting a reverse mortgage, so don’t let anyone hurry you into the decision. If you feel rushed to make a decision for some sort of special deal, take the time to consider whether this may be a scam.

The Benefits of a Reverse Mortgage in Florida

You likely have a lot to gain from getting a reverse mortgage. The following are just a few of the many potential advantages:

  • You can stay in your home for as long as you want.
  • Funds from reverse mortgages are tax-exempt.
  • You’ll have security in the housing market.
  • You’ll have no monthly mortgage payments.
  • You can enjoy loan flexibility.
  • Your homeownership and heirs are not affected by the loan.

As long as you maintain your home and keep up with taxes and insurance, the supplemental income from a reverse mortgage loan can greatly improve your quality of life. Given all the benefits you could receive, a reverse mortgage is certainly worth exploring. Senior Lending Corporation would love to help you explore your options and decide whether a reverse mortgage could enhance your retirement.

Reverse Mortgage Application Process

Reverse Mortgage Application Process

You can expect the reverse mortgage loan application process to take approximately 30 to 45 days. Unlike a traditional home loan, you won’t have to meet a minimum credit score requirement. However, we’ll need to assess your financial status and verify you’re current with any outstanding federal debt obligations. 

Our seven-step application process includes:

  1. Initial application
  2. Reverse mortgage counseling
  3. Counseling certification
  4. Appraisal
  5. Underwriting
  6. Closing 
  7. Funding

Learn More with Senior Lending Corporation

If you think a reverse mortgage might be the right option for you, consult with an expert at Senior Lending Corporation. We’re here to help you decide on how to fund your retirement so you and your family can have peace of mind.

Call us today at 800-822-1190, or fill out our online contact form. One of our trusted advisors will get back to you as soon as possible. We’ll become your knowledgeable partner and answer any questions you might have about your retirement prospects. Get started today!

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