Reverse Mortgage Loans

A reverse mortgage is a program insured by the Federal Housing Administration, or FHA and is a program that allows seniors age 62 and older to tap into a portion of the equity in their home without having to obtain an equity line of credit or with a cash out refinance loan. The reverse mortgage is officially referred to as the Home Equity Conversion Mortgage, or HECM, but it’s more commonly known as a reverse mortgage. A reverse mortgage does not require monthly payments. Over time as interest accrues, the loan is paid off only when the last occupant no longer lives in the property.

The maximum loan limit can vary based upon the age of the youngest borrower, current market rates and the appraised value. There is also a maximum loan amount in Florida for a reverse mortgage. The maximum is $679,650, but you’ll need to speak with a loan officer to provide you with a loan amount based upon these various factors.

Funds are disbursed as a lump sum, as a line of credit or a combination of either. With a lump sum payment, interest accrues from the date of disbursement. With an equity line of credit, interest accrues only on the amounts withdrawn. Borrowers can make payments toward any reverse loan balance at any time as there are no prepayment limits.

There are no restrictions with regard to the use of the funds. If there is an existing mortgage, the funds from the reverse mortgage must first be used to pay off the mortgage. A reverse mortgage must be in a first lien position and cannot be subordinated to any other loan.

Qualifying for a reverse is relatively simple. There are no minimum credit scores required, no pay check stubs or income tax returns needed. The primary qualification will be making the determination the borrowers have the ability to pay property taxes, insurance and maintenance on the home.

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