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The Specific Information You Need to Know about Reverse Mortgages for Florida Seniors!
Your 30 year mortgage required you to make monthly payments for 30 years. Reverse Mortgages don’t require any payments at all - in fact, Reverse Mortgages pay YOU,... monthly.
Florida Reverse Mortgage Qualifications:
- You and Your Spouse must be 62 years old or older.
- You must have either no mortgage or a small mortgage on your home. In other words, you must have substantial equity in your home.
WHAT YOU DO NOT NEED TO QUALIFY:
- Good credit? - Credit history is not a requirement
- Assets? - Net Worth is not a requirement!
- Value of Home-$1,000,000 Home or $50,000 Home? - ALL Homes Qualify!
- Neighborhood? – It makes no difference where you live in Florida!
The lender makes a Reverse Mortgage Loan with the understanding that they will never receive any payments until the home is sold. All of the interest and principal will only be repaid when the home is sold. Since no payments are being made to the lender, there cannot be a default because of a missed payment. So how does the lender make such a strange loan?
It is almost like an insurance policy, but in reverse. The lender determines, by an appraisal, exactly how much your home is worth today and how much it may be worth in the future. This number is the initial number (or maximum value number) that goes into their calculations. Next, the lender consults an actuarial table (a table developed by experts that gauges the average life expectancy of a given age group). By using these two numbers they can compute the maximum amount of money they can loan the borrower, taking into account interest charged and the length of time before they will be repaid. To insure the risk, the lender asks the department of Housing and Urban Development (HUD) to insure a certain portion of the risk just in case the calculations are off.
Remember, you will not lose your Florida home as long as you:
- Pay your Home Owners Insurance each year.
- Pay your Florida Real Estate Taxes each year.
- Live in Your Home.
- Keep the home in reasonable Repair.
You and your heirs are not responsible for paying off any balance due to the lender.
Here’s how the Reverse Mortgage works:
Let’s say your home is worth $200,000, and both of you are 80 years old. Based on this information, the lender determines that you are eligible for a lump-sum payment of $100,000.
The lender is assuming that there will be enough equity left in your home to pay the principal amount of the loan ($100,000), plus interest, if you both live to age 100 (the definite age is determined by the actuarial table). If you live past 100, or even to 150 years old, it is the lender’s responsibility to pay off the balance (that is why they have the HUD Insurance). You are not responsible for any balance due.
So when do you have to sell the house? The home does not have to be sold until the last spouse has left. The home is sold only when you want to move out of the home or you are no longer living there. You might want to move to a retirement village in Florida, or an assisted care or nursing home; or both you and your spouse have passed away. There are several options available for selling the home and paying off the Reverse Mortgage.
Equity Still Left in Home:
- Spouse Still Alive: If you sell the home, the proceeds first go to pay off the Reverse Mortgage, and then you get the rest of the proceeds of the sale.
- Owners Have Passed Away: The heirs can sell the home and the proceeds will first go to pay off the Reverse Mortgage, and then what remains of the proceeds go to the estate to be distributed to the heirs.
NO Equity Left in the Home:
- Spouse Still Alive: You can walk away from the home with no liability! The lender will sell the home, and if the sale proceeds are not sufficient to pay off the Reverse Mortgage, they will make an insurance claim with HUD.
- Owners Have Passed Away: The estate can walk away and the heirs can walk away with no liability! The lender will sell the home, and if the sale proceeds are not sufficient to pay off the Reverse Mortgage, they will make an insurance claim with HUD.
With permission of the estate, an heir can purchase the home if there is equity in the home or not, as long as they pay off the balance owed on the Reverse Mortgage (Principal & Interest).
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