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.