What is a Reverse Mortgage?

Reverse mortgages are unique home loans available to seniors over the age of 62 who are in need of cash. A reverse mortgage allows a borrower to obtain cash without having to make mortgage payments, as long as they have sufficient equity in their homes. Seniors often need extra cash for various expenses including home improvements, urgent medical expenses, in-home care, and normal day-to-day expenses. Continental Mortgage offers reverse mortgages to seniors throughout Miami, Ft. Lauderdale, and Palm Beach.

Unlike home equity loans which require a monthly payment made to a lender, no payments need to be made on a reverse mortgage until the borrower no longer occupies the home as their primary residence. Instead, each month, the lender makes a payment to the borrower which is how the reverse mortgage gets its name.

Seniors and their families tend to have many questions and concerns regarding reverse mortgages. At Continental Mortgage, we are here to educate Florida seniors on reverse mortgages and to provide the information and support they need when deciding if a reverse mortgage is the right choice.

Home Equity Conversion Mortgage (HECM)

A Home Equity Conversion Mortgage (HECM) is the Federal Housing Administration’s (FHA) reverse mortgage product. HECMs make up the majority of the reverse mortgages in the United States as they are the only federally insured reverse mortgage product available. To be eligible for the HECM program, applicants must meet the following qualifications.

Florida HECM Borrowers must:

  • Be at least 62 years of age
  • Have a low mortgage balance or own their home outright
  • Occupy the home as their primary residence
  • Not be delinquent on any federal debt
  • Be able to meet financial obligations including property taxes, insurance, Homeowner Association fees, etc.
  • Participate in a reverse mortgage information session given by a counselor approved by the U.S. Department of Housing and Urban Development (HUD).

To ensure that a borrower can meet their financial obligations, income, current expenses, and credit history will need to be reviewed. The FHA also requires that each borrower’s property meet specific standards and flood requirements.

Reverse mortgage borrowers can choose different payment plans based on their needs. If a borrower selects a fixed-rate reverse mortgage, they will only be able to receive a single disbursement lump sum payment. Additional payment plans are available for those with adjustable-rate reverse mortgages including:

  • Line of Credit
  • Term – equal monthly payments for a set number of months
  • Tenure – equal monthly payments as long as one borrower occupies the property
  • Modified Tenure – line of credit and tenure combination
  • Modified Term – line of credit and term combination

Continental Mortgage is committed to assisting seniors and their families throughout Miami, Ft. Lauderdale, and Palm Beach, with all their reverse mortgage needs. If you have any questions about Florida reverse mortgages or if you are ready to apply for your reverse mortgage, contact us today!