If you are a senior homeowner in Florida, one way you can bring more flexibility to your financial situation is to apply for a reverse mortgage.
While reverse mortgages offer many benefits, you might have questions about how they work before you apply. Below, we answer a few FAQs about this loan product.
Frequently Asked Questions About Reverse Mortgages
Q: Can I stay in my home?
A: Yes. You still own your home if you take out a reverse mortgage, and you do not share your equity. You can live in the home for as long as you want, provided you stay up to date with your mortgage payments, property taxes, homeowner’s insurance, and home maintenance costs.
Many people who take out reverse mortgages remain in their homes for the rest of their lives.
Q: What are the benefits of a reverse mortgage?
A: Reverse mortgages are flexible lending products. You can choose a disbursement option you are comfortable with, and use the funds you receive in any manner you choose.
Most types of loans you can take out need to be repaid soon after you receive the money (i.e. personal loans). But a reverse mortgage does not come due until a maturity event.
Q: When does a reverse mortgage become due?
A: As we just mentioned, a maturity event needs to take place for a reverse mortgage to become due. Here are some examples of maturity events:
- The death of the last borrower on the loan
- The sale of the house
- Non-occupancy of the home for 12 consecutive years by the borrower
- A failure to keep up with home maintenance payments and other costs that are the borrower’s obligation
So long as you are able to stay current with your required payments and you do not need to leave your home for 12 consecutive months, you should be able to stay in it and enjoy the benefits of the reverse mortgage.
Q: How will a reverse mortgage affect my heirs?
A: The reverse mortgage comes due after the death of the last borrower, so your heirs will need to decide how to repay it.
There are two possibilities. Either your heirs can pay off the loan balance, or they can sell the home and use the proceeds to do so.
You might be concerned about a scenario where the value of the home is less than what your heirs need to pay off the loan.
The Consumer Financial Protection Bureau says, “if the balance is more than the home is worth, your heirs don’t have to pay the difference. If your heirs sell the home, the lender will take the proceeds from the sale as payment on the loan, and the FHA insurance will cover any remaining loan balance.”
The bureau continues, “If your heirs would like to keep your home instead of selling it, the loan must be paid off with another source of funds. Your heirs will never have to pay more than the full loan balance or 95 percent of the home’s appraised value, whichever is less.”
Q: Does a reverse mortgage impact other benefits I receive?
A: You do not need to worry about a reverse mortgage reducing your Social Security or Medicare benefits. But depending on the scenario, reverse mortgage payouts may reduce what you qualify for through Medicaid or Supplemental Security Income (SSI).
You can avoid losing benefits by spending reverse mortgage funds during the month you receive them in their entirety. But this is not always convenient.
Sometimes, opting to receive reverse mortgage funds through a line of credit rather than a monthly payment or lump sum can allow you to circumnavigate this issue.
Q: Do I qualify for a reverse mortgage?
A: You may qualify for a reverse mortgage if at least one borrower is age 62 or above and you own at least 50 percent equity in your home. The home must be your primary residence. The best way to find out if you are eligible is to apply. During your consultation, we can provide you with the full details about reverse mortgage qualification requirements.
Apply for a Reverse Mortgage in Florida Now
Ready to supplement your income and receive financial flexibility in your retirement? Lending Bankers Mortgage can help you apply quickly and easily for a reverse mortgage in Miami or anywhere in Florida. To get started now, please call us today at 786-220-1100 to schedule your consultation.