Brenda Lyle – Florida Today
By Brenda Lyle
Q: Are reverse mortgages safe for Florida seniors?
A: Many senior homeowners in the Sunshine State have seen television commercials about reverse mortgages. With living expenses on the rise, many retirees are looking for ways to boost their cash flow without selling their homes. Here’s some information about the FHA Home Equity Conversion Mortgage (HECM) –and what it can mean for you.
What is a HECM?
A HECM is the most common type of reverse mortgage. Backed and insured by the Federal Housing Administration (FHA), it allows homeowners to convert a portion of their home equity into tax-free cash. Unlike a traditional mortgage or home equity line of credit, monthly loan payments are optional. The loan balance could therefore grow over time. It is only required to be repaid when you sell the home, permanently move out, or pass away.
Benefits
• No Required Monthly Mortgage Payments: Frees up cash flow.
• Tax-Free Funds: Whether taken as cash, credit line, or monthly income.
• Aging in Place: Use for home modifications, medical bills or supplemental income.
• Retaining Ownership: The homeowner keeps the title to the property.
Obligations
• Property Charges: Homeowners remain fully responsible for paying local property taxes, homeowners insurance, and home maintenance. Failing these can lead to default.
• Loan Repayment: The loan becomes due and payable when the last borrower sells the home, moves out permanently, or passes away.
• Equity Impact: An increased loan balance with accrued interest can reduce the final inheritance left to heirs—if one chooses not to make their monthly mortgage payments.
Qualifying in Florida
• Age and Residence: The primary borrower must be at least 62 years old. The home must also serve as your principal residence. Vacation homes or rental properties do not qualify.
• Substantial Equity: The home must be owned outright or have at least 65% equity. Any current mortgage balance will be completely paid off at closing using the HECM proceeds.
• Property Standards: The property must pass an FHA appraisal and meet safety standards. Single-family homes, multi-unit properties and FHA-approved condos are eligible.
• Financial Assessment: Lenders must verify your cash flow is sufficient to pay ongoing property taxes, homeowners insurance, and HOA fees. If needed, a portion of your loan proceeds may be set aside to cover these future bills.
Consumer Protection
Before a lender can process your application, you must complete a session with an independent, HUD-approved housing counselor. The counselor will walk you through the costs, benefits, and financial alternatives.
Learn More
Florida seniors might consider a Home Equity Conversion Mortgage (HECM) to eliminate monthly mortgage payments, supplement retirement income, or cover healthcare and living costs—all while continuing to live in their primary residence. To learn more, visit www.hud.gov/helping-americans/seniors
Brenda Lyle is a Certified Care Manager and Certified Dementia Practitioner with One Senior Place, Greater Orlando. One Senior Place is a marketplace for resources and provider of information, advice, care and on-site services for seniors and their families. Submit your questions to AskOSP@OneSeniorPlace.com. For immediate help, call 321-751-6771 or visit One Senior Place, The Experts in Aging.
