4 Things You Need to Know About Reverse Mortgages in Florida

As expected, the State of Florida is home to the most senior retirees in the nation since it is the state with the second-lowest cost of living. But a reverse mortgage is not free money. Floridians often misuse or fall victim to reverse mortgage scams.

A reverse mortgage can be a great financial solution during retirement in the right situation. However, there are many situations where that is not the case. Here are four things that you should know about reverse mortgages in Florida before you apply:

Things You Need to Know About Reverse Mortgages

1. A Reverse Mortgage Must Be Repaid Sooner Than You Think. Many Floridians try to avoid thinking that they will not be around forever. They believe that they will live many years in their home and it will basically be given to the next generation. However, in most cases, the reverse mortgage is repaid substantially earlier than that. Typically, a reverse mortgage is repaid in full when the homeowner passes away or sells the home. For example, if you were to apply for a $200,000 reverse mortgage, it is more likely to be repaid within five years if you pass away before that time. The interest on the loan is added to the principal every month and proliferates.
2. More Fees Are Involved With Reverse Mortgages Than Traditional Mortgages. A reverse mortgage may come with more fees than a traditional mortgage. These fees are typically higher because a reverse mortgage is a loan, and the lender must be compensated for giving you the loan. There will be an origination fee and a monthly fee and the lender must know that they will be repaid.
3. A Reverse Mortgage Should Not Be Your Only Source Of Retirement Income. The purpose of a reverse mortgage is to allow you to live in your home. Unless you have a solid plan to repay the loan, it shouldn’t be used as a strategy to pay for daily living. The money you receive from the reverse mortgage is taxable income, and the interest on the loan is compounded. This can cause you to lose more than half of your loan balance over time. It should be used for emergencies and unexpected expenses.
4. Your Heirs May Not Be Responsible For Paying Off The Loan. You should consider your heirs before going through the reverse mortgage process. Before you apply for a reverse mortgage, you should determine whether or not your children or family will be responsible for paying it off. Many people assume that this is not the case, but that is not always the case. You should understand the process before you apply for a reverse mortgage. It is possible that the heirs will pay the mortgage, but there may be other ways to handle the loan.

Your Mortgage Experts in Cape Coral and Beyond!

Before you apply for a reverse mortgage in Florida, you should speak with a reverse mortgage specialist in Florida. Our specialists can help you to determine whether or not you are eligible for the loan and if it is the right choice for your situation.

American Mortgage Solutions Florida is a mortgage broker that has financed home buyers’ and homeowners’ dreams! We are proudly licensed in and serve Florida, Kentucky, Indiana, Colorado, and Tennessee. We’re here to make the mortgage process itself a dream, quickly and easily matching you with the ideal loan for your needs. Our streamlined process makes it a breeze to buy a home, refinance, or tap into your home equity. If you need a mortgage loan in Cape Coral, Florida and beyond, we’ve got you covered! Call us at (239) 766-8344 to explore your options!