Reverse Mortgages in Florida: Understand the Option Before You Decide

Depending on the loan structure and current program rules, HECM proceeds may be available through:

• A line of credit
• Monthly disbursements
• A lump-sum disbursement
• A permitted combination of options

The amount available depends on factors that can include the age of the youngest borrower or eligible non-borrowing spouse, the home’s value, current interest rates, existing mortgage obligations and the selected loan structure.

Proprietary reverse mortgages have their own proceeds and disbursement rules.

An existing mortgage or other required property lien generally must be paid off when the reverse mortgage closes.

Reverse-mortgage proceeds may be used toward that payoff. If the available proceeds are not enough, the homeowner may need to bring additional funds or consider another option.

A reverse mortgage removes the requirement for monthly principal-and-interest payments, but it does not remove the responsibilities of homeownership.

The homeowner must continue to:

• Occupy the property as their primary residence when required by the program
• Pay property taxes
• Maintain homeowners insurance and flood insurance when required
• Pay applicable condominium or homeowners-association charges
• Keep the property in good condition
• Follow the loan’s occupancy and certification requirements

Missing these obligations can cause the loan to become due and payable and may lead to foreclosure.

Before obtaining an FHA-insured HECM, borrowers must complete counseling with an independent HUD-approved reverse-mortgage counseling agency (opens in a new tab).

The counselor explains how the loan works, its costs, the homeowner’s responsibilities and possible alternatives. The lender also completes a financial assessment to determine whether the borrower has the financial capacity to meet ongoing property obligations.

HUD can also help locate an approved counselor at 800-569-4287.

Reverse mortgages can include origination charges, appraisal expenses, closing costs, interest and other fees. FHA-insured HECMs also include mortgage-insurance costs.

Because interest and fees are added to the loan, the balance generally increases and the homeowner’s remaining equity generally decreases over time.

Before moving forward, it is important to compare the reverse mortgage with alternatives such as a traditional refinance, home-equity loan or line of credit, selling or downsizing, and using other available assets.

A reverse mortgage can be useful in the right situation. It is not automatically the right answer simply because someone meets the age requirement.

The homeowner keeps title to the property while the reverse mortgage is in place.

When the loan becomes due, the home may be sold to repay the balance, with remaining equity going to the homeowner or estate. Heirs may also have options to repay the applicable balance and keep the home.

FHA-insured HECMs include non-recourse protections. The borrower or estate is generally not responsible for a HECM debt beyond the applicable value of the home. Proprietary reverse mortgages may have different provisions.

Planning should include any spouse, family member or other person who lives in the home or may inherit it.

Education first. Then the numbers.

I help you compare HECM and proprietary reverse-mortgage options, understand how the balance may change and see how the loan fits with your housing and financial goals.

We will talk through the advantages, costs, responsibilities, alternatives and questions your family may have. I remain your direct contact throughout the mortgage process.