Articles

Reverse Mortgages

 

By Rick Barra, Esq.
 
This mortgage product is increasing in popularity. Housing and Urban Development data indicates that three of the top 10 markets in the country are located in Florida (Miami, Tampa and Orlando). The Reverse Mortgage is expensive and, certainly, not for everyone but the following is a brief overview:
 
1. A Reverse Mortgage is a loan against your home that does not have to be paid back as long as you live in your home, pay the ad valorem taxes, maintain homeowners insurance and make property repairs 
 
2. Cash received from a Reverse Mortgage can be paid to you as:
 
(a) a single lump payment
(b) a guaranteed monthly cash advance for the rest of your life or as long as you live in your home
(c) a credit line that allows you to determine when and how much of the available cash is paid to you
(d) a combination of the above
 
3. To qualify for a Reverse Mortgage,  the record title owner(s) must be at least 62 years of age
 
4. You do not need income to qualify
 
5. You do not make monthly repayments on a Reverse Mortgage. 
 
6. Generally, the lender does not have legal recourse to anything other than your home's value and cannot seek repayment from your heirs
 
7. The loan to value ratio is substantially lower than a traditional forward mortgage
 
8. The cost associated with Reverse Mortgages are higher than a traditional forward mortgage.
 
9. You must have counseling from a HUD approved counselor to be eligible for a federally insured reverse mortgage
 
10. The impact of a reverse mortgage on your heirs could mean there will be little, if any, equity left for them
 
There are far too many aspects of a Reverse Mortgage to be covered in this short article. If you are considering a Reverse Mortgage, Rick Barra would be happy to speak with you.