What is a reverse mortgage?
A Florida Reverse Mortgage allows older homeowner’s (62+) to convert home equity into cash through monthly income, a line of credit or cash. The Florida reverse mortgage is different from conventional home equity loans: No income or credit qualifications, no monthly or immediate repayment due. The Florida reverse mortgage is repaid when the home is no longer the primary residence of the borrower (s).
There are several types of Reverse Mortgages:
- FHA insured HECM, sponsored by a branch of the U.S. Department of Housing and Urban Development (HUD)
- Fannie Mae Home Keeper, sponsored by Fannie Mae
- Proprietary programs by private banks
FL Reverse Mortgage Property Qualifications
Single family up to four units…
The borrower has to reside in one unit as their primary residence but can rent the other unit (s).
Condos…
The condominium needs to be HUD approved or receive HUD spot approval. This can be done with a spot condominium affidavit completed by the homeowners association (provided by the lender). Special assessments and on-going litigation are not acceptable. HOA reserve must be sufficient. Planned Unit Developments (PUD).
Manufactured Homes…
Manufactured Homes maybe acceptable under certain conditions.
How do I the borrower get paid?
Monthly Payments…
As a tenure plan: receive a check for as long as one lives in their home.
As a term payment: receive a check for a certain period, i.e. 10 years or 15 years (only available on the HECM).
Line of Credit…
With the FHA HECM loan, the balance in the credit line could grow at .5% higher than the current interest rate being accrued. This could result in more money available for the borrower at future dates (There is no growth rate with the Fannie Mae Home Keeper loan).
Lump Sum or a Combination of the above…
With either the FHA or Fannie Mae loans, the payment plan may be changed during the term of the loan. A small one-time fee will be charged to the loan balance at the time of each change.
Florida Reverse Mortgage: FAQ
What is a Florida reverse mortgage?
It is a home loan similar to a home equity loan except payments are not required. It allows older homeowners to convert home equity into cash.
Who is eligible for a Florida reverse mortgage?
Borrowers must be at least 62 years of age and either own their home free and clear, or pay off, from the proceeds of the new reverse mortgage, any existing balance on the previous mortgage. The home must be the principal place of residence.
How safe is a Florida reverse mortgage?
A reverse mortgage is one of the safest mortgages available. Title to the property remains with the homeowners or their trust. There is no obligation to make payments, as long as the home is occupied by the borrower. A reverse mortgage is non-recourse, the lender only looks to the home for repayment. The Home Equity Conversion Mortgage (HECM) is insured by the Federal Department of Housing & Urban Development (HUD) through FHA mortgage insurance.
What are the fees involved in getting a Florida reverse mortgage?
There is an origination fee, closing costs, and a mortgage insurance premium. Usually, the borrower does not pay any fees out of pocket. A servicing fee sum is set aside up front and charged monthly over the life of the loan. Charges are incurred during the loan process such as appraisal and pest inspection fees and paid through loan proceeds at the close of escrow.
Why is it called a Florida reverse mortgage?
It is opposite or reverse of a conventional mortgage where the homeowner borrows a large amount and makes monthly payments until completely paid off. With a reverse mortgage, money is advanced and payments are not made until the homeowner permanently leaves or sells the home.
What is the purpose of counseling and how is a counselor located?
To discuss features of the program with an independent, HUD approved agency. The counselor explores options and helps the client understand the program.
Does the borrower have to make any payments?
The borrower doesn’t have to make any monthly mortgage payments during the life of the loan. The reverse mortgage becomes fully repayable upon: the death of the borrower, sale or transfer of property, a permanent move from the home (after 12 months if away due to medical reasons), failure to maintain property or nonpayment of property taxes or homeowners insurance.We can provide Florida reverse mortgages in all FL areas including:Miami reverse mortgage
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