Florida Reverse Mortgages

Reverse mortgages are an excellent solution to financial concerns for many seniors across Florida. Home Equity Conversion Mortgage (HECMs) are the most popular reverse mortgage available. However, they are not for everyone, and applicants should be confident that they understand the negatives as well as the positives prior to signing for a reverse mortgage.

Reverse Mortgage Highlights

• No monthly payments
• The lender pays you
• No income or credit requirements
• Convert your equity into cash
• HECMs are insured by the Federal Housing Administration
• Mortgage Insurance Premium (MIP)
  • A Reverse Mortgage in conjunction with Florida homestead law helps protects you from losing your home.

What is a “Reverse Mortgage”? Well in simple layman’s term and not an exact legal definition, the Reverse Mortgage loan is a contract between lender and borrower and can be broken down into basically three main parts.

Part 1 is a 1st mortgage loan similar to a standard FHA forward mortgage with standard amortization of a 30-year loan. The interest rate on the loan can be a fixed or an adjustable rate, but the choice is that of the borrower(s).

Part 2 is a 2nd mortgage loan similar to a HELOC, Home Equity line of Credit. This part of the contract uses the homes remaining equity to pay the first mortgage loan (part 1).

Part 3 is a credit line which is available with loans that have an adjustable interest rate. This feature allows the borrower to take out more cash at any given time of their choosing after the first year. All they have to do is call the lender and request the available funds to be sent to them.

Reverse Mortgage Loans Available in Florida

To be eligible for a Reverse Mortgage the borrowers must:

• At least one borrower be 62 years old or more
• Must own the property and occupy it as a primary residence
• Must maintain the home with required repairs.
• Pay the insurance and property taxes.
• The Property must meet FHA property standards
• The applicants must participate in an informational counseling session
• must maintain Home Association Fees if applicable
• If you own a condo, the condo association must be a HUD approved Condo Association in some cases single unit approval may be possible

The Reverse Mortgage Loan is based on:

• The age of the youngest borrower
• The current interest rate is most often based on the LIBOR
• The lesser of the appraised value or the FHA insurance limit

*** Can we do a “Jumbo Reverse Mortgage Loan”? Yes, but the rules around the available loan-to-value change dramatically but is still mainly driven by age.

**** Can we refinance our current Reverse Mortgage? Yes, a reverse mortgage can be refinanced after the original closing date is greater than 18 months ago. Often this is only a benefit if someone has the ability to capture capital appreciation. The borrower(s) should always be aware of any solicitation of a reverse mortgage refinance, and make sure that it’s a true benefit to themselves and not a greater benefit to the loan originator, who maybe, just looking for compensation.

Reverse mortgages can be used to:

• Pay off debts
• Pay for medications or long-term care needs
• Pay property taxes
• To go on vacation
• Pay for education of grandchildren
• Pretty much anything else you can think of

How To:

• Research the best available options based on your requirements by using a qualified and experienced loan originator. That’s us!
• In order for seniors to be fully aware of all the financial aspects involved with a Reverse Mortgage, they MUST attend third party counseling through official HUD approved agencies. We will be happy to provide you with a list for you to choose from, along with your loan comparison sheet (you will need one).
• The application for the reverse mortgage can be completed with our assistance and will include your agreed payment options:
  • Lump sum
  • Monthly payment which can be for a designated period of time or as long as you live in the home
  • A line of credit which can include installments or unscheduled payments, which are available until the line of credit expires or is exhausted.
  • A combination of the above three
• The processing of your application will include the following. Your lender will order the appraisal, a title report, a credit report, and lien pay-offs. The appraiser will look at any structural defects or repairs visible to the eye that maybe required and determine value of your home.
• Once all of the information has been collected, the lender will finalize the necessary parameters. They will package and submit the loan for the underwriting, and then process the final approval.
• The closing is only scheduled once the loan has been approved and all disclosures have been finalized and signed. The normal closing costs are included as part of the loan except with a Reverse Mortgage Purchase of a new home.

Unlike traditional loans, there are no monthly payments to be made during the lifetime of the loan. The debt from the reverse mortgage becomes payable in full immediately when:

• The home is sold
• The home is no longer the primary residence
• The borrower (if single) or both borrowers pass away

Upon the death of the borrower(s), the heirs can simply walk away from the home without liability or obligation to repay the loan or they may sell the home and the outstanding loan balance will be repaid from the sale of the home. Alternatively, if the existing reverse mortgage could be refinanced or a purchase transaction completed, all of the remaining equity belongs to the heirs or to the estate. Upon the death of the last spouse/borrower the family/children may purchase or refinance the home at the lessor of the outstanding loan amount or 95% of the appraised value.

Counseling information for reverse mortgage applicants typically takes 1-4 hours.

The counselor must be employed by a third-party non-profit or public agency that is approved by the HUD (US Department of Housing and Urban Development). The counselor is required to use loan analysis and comparison software which follows the HUD’s counseling policies and procedures.

What is Included in the class?

• A complete review of your budget, which includes your current income and outgoing expenses.
• A complete review of the TALC Disclosure, which you will receive from your lender regarding the future total cost of the loan.
• A complete review of interest rates which are involved in the reverse mortgage you are about to sign.
• A complete review of the property repairs, if any are applicable.
• A complete review of terminology used in the contractual paperwork, including definitions.
• Discuss any other possible options, which may be available to you given your current financial and personal situation.
• You cannot vacate the property for more than 6 months in a calendar year. (Homestead)
• You can lose your home if you do not pay your property taxes HOA or homeowners insurance.
• You can also lose your home to mechanics lien (outstanding bills from contractors)

Reverse mortgages in the Education Center

If you have any questions or would like further assistance, please contact us directly and we will try our very best to help wherever possible.

We are a Florida mortgage brokerage and our services have been designed to remove the stress and misunderstandings commonly associated with a mortgage loan.

For further information about getting the right mortgage for you and to arrange your ‘NO-FEE ASSESSMENT’
Call us on 941-444-9240