Reverse Mortgage Companies In Florida - Have you ever wondered how a reverse mortgage came about? It all started in 1961 with a widow named Nellie Young and banker Nelson Haynes. Haynes, who worked for Deering Savings & Loan in Portland, Maine, wrote the first ever Mrs. reverse mortgage. Young to help her stay in her home after her husband — who happened to be Haynes' high school football coach — died. Since then, the reverse mortgage concept has taken off.
The subject of reverse mortgages was debated by the Senate Committee on Aging in Congress in 1969. The committee was intrigued by the concept and the chairman showed great interest. However, reverse mortgages haven't completely taken the industry by storm.
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It wasn't until the 1970s that reverse mortgages really started to take off, with many private banks offering them as part of their product line. During this time, reverse mortgages have helped many seniors; however, they lack the same protections that are common in today's reverse mortgage products.
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As more and more private lenders began offering reverse mortgages, government concerns about the lack of regulation began to grow. Many believe that reverse mortgages should have a set of standards that all reverse mortgage lenders must adhere to, as well as FHA insurance. In 1983, the first congressional hearing on reverse mortgages was held. At this hearing, the Senate approved a proposal by Senator John Heinz to make the reverse mortgage insured by the FHA.
In 1987, Congress passed the FHA Insurance Act, which would insure reverse mortgages. The following year, President Ronald Reagan signed the FHA Reverse Mortgage Act. In 1989, the first FHA-insured reverse mortgage (or Home Equity Conversion Mortgage / HECM) was written.
Reverse mortgages have been around for over 30 years and have had their share of negative press. Today, fortunately, new regulations and stricter lending standards have made HECMs a safer and more valuable financial solution for older homeowners. Here are some of the biggest benefits of choosing a reverse mortgage today:
*You are still responsible for paying your homeowners insurance premiums and property taxes. Failure to meet these obligations may result in debt repayment or default. Chances are you've seen ads for Florida reverse mortgages endorsed by a well-known, older celebrity. As the state home to 4.5 million adults age 65 and older, according to a 2019 Statista report, Florida is fertile ground for reverse mortgage marketing. Florida reverse mortgages offer an attractive financial tool for many people who reach the legal minimum age of 62 and understand the pros and cons.
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Below is an overview of this type of loan that explains the good and bad news about reverse mortgages in Florida.
The Florida Attorney General's Office defines a reverse mortgage as a loan that allows consumers age 62 or older to receive additional cash payments of income through access to their home equity. Borrowers are entitled to a tax-free cash payment in the form of a lump sum or regular ongoing payments. In some cases, a line of credit is established for repayment as needed, whenever the borrower wishes.
As a borrower, you retain title to your Florida home. As long as you continue to live in the home full-time, pay taxes and homeowner's insurance, and maintain the home, then no payments to the lender are required. In cases where the above requirements are not met, the creditor may declare the debt due. Common events that trigger a repayment requirement are the death of the borrower, the borrower moving into an assisted living or health care facility, refusing to keep the home in good repair, or falling behind on property taxes. - homeowners or insurance premium payments.
It is important to remember that the heirs of your estate can keep the property by paying 95% of the house's determined market value or the balance of the loan, whichever is less, to keep the house when foreclosure occurs. Loan balances include interest and taxes.
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As with any loan, it is important to fully understand the necessary qualifications required for approval. The condition for this type of mortgage is that at least one borrower must be 62 years of age or older. The home must also be a permanent residence where the borrower spends most of his time living in the home as his primary residence.
Borrowers must have a significant amount of equity to be seriously considered for Florida reverse mortgages. While they may not be directly owned, the amount of equity must be large enough for risk-averse lenders to feel they are making a prudent decision when extending a loan.
Homes with a tax lien do not qualify. Once seniors meet all other requirements, determined older Floridians can pay tax liens to be considered for a reverse mortgage.
Another important requirement in Florida for a complete loan package is that you must complete mortgage counseling with an approved reverse mortgage counselor who is considered competent in the US. Department of Housing and Urban Development (HUD). Counseling can take place in person or by phone, which is more convenient for many borrowers. There is a fee for counseling, which must be paid upfront unless borrowers are facing hard times that fall under the hardship category, such as foreclosure, bankruptcy, or hospice care.
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All persons listed in the deed must agree to obtain this loan. While this requirement seems like common sense, problems can arise when the homeowner isn't sure they want the loan. Everyone whose name appears on the deed is required to sign the loan documents.
There are different types of Florida reverse mortgages available for senior borrowers. All have a purpose based on meeting the different needs of borrowers with unique circumstances to consider.
This is the most popular reverse mortgage loan available. Like most loans, there are pros and cons. While the initial cost of a HECM tends to be high, the fact that the funds can be used for absolutely any purpose is an attractive benefit.
HECMs are offered exclusively by FHA approved lenders, which means all borrowers must complete counseling to qualify for a loan. While this is seen as a negative for many seniors, the fact that these lenders and counselors are readily available often gives borrowers the confidence to move forward.
A Guide To Reverse Mortgages
This type of mortgage is less common than a HECM. This mortgage is usually offered by state and local agencies or nonprofits. Loans in this category are mostly for a smaller amount and are intended for one purpose. This type of reverse mortgage usually has lower fees.
This mortgage product is offered as a private loan that is not connected to government agencies. Larger loan amounts are common, especially if the homes are expensive with a high value.
In many ways, the costs associated with obtaining a HECM reverse mortgage are similar to other mortgage loans. Although reverse mortgage closing costs can be quite expensive, the good news is that most lenders allow borrowers to put them into the loan to avoid upfront costs. Below are some of the costs you can expect.
Lenders charge an initial fee to process your loan. There are set limits on the amount that can be charged for HECM loans. Specifically, lenders can charge a maximum of $2,500 or 2% on the first $200,000 of a home's value, adding 1% to the total after the home's value exceeds $200,000. $6,000 is the maximum that can be charged on any home regardless of price.
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A total of 2% MIP is due at closing as a down payment. In addition, 0.5% charged annually must also be paid at the closing table to cover the first year's premium. Fortunately, the first year of the MIP is usually combined with a loan for most borrowers.
Many of the services required to close a loan are outsourced by mortgage companies to third parties. Common fees in this category are credit checks, home appraisals, home inspections, title searches, and recording fees to name a few.
Many lenders charge a monthly fee designed to pay for the monitoring and maintenance of the HECM loan throughout the life of the loan. $30 is set as the maximum fee allowed for fixed rate and adjustable APR loan products. Borrowers with adjustable-rate loans can pay a maximum of $35 per month.
It's worth noting that reverse mortgages typically charge a higher interest rate. It is true that different lenders can vary widely. Shopping around for the best price is highly recommended.
What Property Types Qualify For Reverse Mortgages?
You've probably seen their commercials with Tom Selleck on TV and in print publications. AAG is the leading provider of reverse mortgages in the US. They specialize in the financial needs of seniors.
AAG prices vary based on factors such as your age, life expectancy, property taxes, etc.
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