FLORIDA REVERSE MORTGAGE TIPS
Florida Reverse Mortgage Types
"What kind of a Florida reverse mortgage should I get?" is the biggest question asked after the decision to actually get a reverse mortgage has been made. Before you start talking with a lender do some research on the three types of Florida reverse mortgage available.
These are the three options available:
* Home Equity Conversion Mortgage (HECM) — FHA insured
* Lender insured loans
* uninsured loans
The loans have some commonalities: they all have closing costs and origination fees, and some lenders apply some service charges and administration costs that will be disclosed prior to signing.
HECM loans are the loans most people prefer. They have the backing of the Federal Housing Authority, so there are some federal safeguards there for you. The lender has to follow all the federal guidelines with the loan, the lenders themselves have to meet certain minimum standards, and lenders like dealing with these loans because they are guaranteed by the federal government.
If you take out a privately insured Florida reverse mortgage, there is a premium charge applied to the loan costs for the insurance. Like the other loans, all these loans are applied as part of your loan amount so you are not out of pocket when you obtain a Florida reverse mortgage. That's an advantage that's also a disadvantage of sorts: the loan has an immediate reduction in the equity to pay for the loan costs and interest.
There is the uninsured variety of reverse mortgages but those loans are good for special circumstances. You should talk to your loan counselor if you want to learn more about this loan or all the Florida reverse mortgage types presented here.
No matter which Florida reverse mortgage you choose to employ as your financial tool, you should approach each option fully informed.
The Features of a Florida Reverse Mortgage
What should I know about Florida reverse mortgage?
If you are over 61 years of age and own your principal residence, you are eligible for a Florida reverse mortgage. A Florida reverse mortgage may be the ideal vehicle for people who are on a fixed income and need some extra money to fund projects they want to accomplish in their retirement. For many people, their house is their single biggest asset and the equity remains untapped.
What are the significant features of a Florida reverse mortgage?
The two most significant features of a reverse mortgage is that you retain the title to your home and the loan must be repaid when you or your spouse - whomever lives longer - passes away, sells the property, or no longer uses in the property as their principal residence. Since a reverse mortgage is a loan, the money received is not taxable as income. There are some things to consider prior to taking a Florida reverse mortgage the most important factor being that it is still a home loan and subject to many of the same rules and obligations. Origination fees and closing costs must still be paid to the lender. Like conventional home mortgages, the lender may charge service fees during the whole term of the mortgage. Like conventional home loans reverse mortgage's may have fixed or variable rates. Many times variable rates are tied to a particular financial index and fluctuate with the state of the market. Like a conventional mortgage, the interest rate is tax deductible when you are paying the lender. That means you can only avail yourself of the benefits of tax deduction when you are settling the loan, not while you are receiving funds.
4 Steps for a Florida Reverse Mortgage
A Florida reverse mortgage is a terrific financial tool for many people. It alleviates financial difficulty and minimizes the pressure of rising costs. Many of your friends have told you they have gotten one and are very happy that they've done so. Your house has been paid off for a while, you don't plan to move, and you and your spouse are both over the age of 61. Everyone says this is a good deal. Should you drop what you're doing and run right over to your local Florida reverse mortgage shop and pick one up? No. As simple as it is, it's not that easy. Like any other major financial decision, there are some things you should check over first. A reverse mortgage in Florida, like any other state, impacts all your finances and you should check over some things.
To start you off, we have four things for you to do and to consider:
1. Educate yourself.
Don't just get stories from your friends. All situations are different and after the fact, their facts may get all mixed up. Do the research yourself and make special note of things that apply to your situation.
2. What's the property worth?
Equity is the name of the game; how much you can borrow all depends on the value of the property. Get a registered certified appraiser to examine your home prior to getting a reverse mortgage. It's probably the most expensive thirty minutes that you'll pay for but it will be worth it in the long run. Real estate agents have other factors pressing when they give you their “free” estimate. The appraiser will give you an honest evaluation free from any personal concerns.
3. Is it worth it?
After you've learned what you might receive and all the guidelines surrounding a Florida reverse mortgage, is it worth all the trouble? Extra money is nice, but do you really need it? This money has to be spent, not saved, since it is a loan.
4. Talk to your people.
It's always funny in the movies when a person says “I'll have my people talk to your people.” In this case it's a serious matter. Your people – your accountant, your attorney – should be consulted prior to engaging in a Florida reverse mortgage. Your situation is unique and there may be things that your research didn't uncover.
Ask Yourself This:
Do I or we need more money every month -- that sounds like a good deal. For many people, a Florida reverse mortgage is a sound financial tool. They're 62 years old or older and they own their home outright. Still, a reverse mortgage, while a fine thing for some people, may not be for you. Here are three things to think about before you go searching for lenders.
1. Do you need the extra income?
A Florida reverse mortgage is a tax-free income stream but it does cost some money. Any loan has interest on the principal. In a reverse mortgage, as time goes by, the principal grows and the amount of interest accruing grows as well.
A reverse mortgage doesn't get smaller as you repay it. You should be getting a Florida reverse mortgage to pay for things you would like to enjoy or projects you would like to undertake. You should not be getting a Florida reverse mortgage to increase your liquid assets. Increasing your liquid assets may be a bad idea depending on your situation. Plan on spending the money.
2. How long will I be around?
When you take the tenure monthly payment option, which is the option many people take, the longer you live, the better a deal you're going to get. If you're in relatively good health and it seems that you're going to be around for a long, long time, a Florida reverse mortgage may be a terrific deal. 3.Do I want to leave an inheritance?
A Florida reverse mortgage uses your property as collateral. Most Americans list their home as their single largest asset and this asset is usually passed on to their heirs. The formula is simple for inheritors when dealing with a Florida reverse mortgage. After the last homeowner has passed away the debt becomes due and the heirs must pay the note. They can pay the note and remove the lien on the house or they can sell the house and pay the note. A reverse mortgage is a non-recourse note, so if the heirs sell the house at market value and it doesn't cover the debt, the debt is settled anyway, since the lender has no recourse to other assets. If the heirs sell the house and the value exceeds that of the debt, they keep the balance.
Retirement Tips:
Retirement is the No. 1 goal of investors. Yet, looking at the numbers, it's clear that many investors are undermining their good intentions with unfortunate actions. A Florida reverse mortgage is a tool to supplement other investment strategies you've put in place. Here are ten tips to make your retirement years truly golden.
1. "Nest egg" means later, not now.
Almost half of the people who cash in 401(k) accounts don't roll the money over into an IRA. When you do that you pay income taxes on the money, plus a 10% penalty. Sounds severe, but people do it all the time. You never saw the money; you never touched the money. There's no need to get acquisitive, after all, it was just numbers on a page before. You have everything to gain if you rollover your 401(k). If you take out the money now just remember that $2000 could be $15,000 when you retire, and the flat panel TV you're planning to buy with the money will be long gone. Besides, don't you want the spiffy hologram television that'll be out when you're in the autumn of your life.
2. Just like when you were working, you can't spend everything.
Saving is money is boring. But like cleaning the bathroom or using soap, it's pretty necessary. The difference is that people will talk to you if you don't save money. Don't spend your retirement now. E.M. Forster wrote "Money is the fruit of self-denial."
3. Save enough or more than enough. Saving not enough doesn't keep you comfortable in later years.
Almost two-thirds of workers don' know how much they need to save. The first goal of a retirement plan is to know what the goals should be. See if a Florida reverse mortgage may be part of your financial future. Talk with a financial counselor or avail yourself of the many retirement tools on the internet.
4. Pay yourself a set salary.
You've reached retirement and you're now ready to tap into your nest egg. Just remember that it's your retirement fund and not winnings from the church bingo. It's not a windfall so don't treat it that way. Consider your lifestyle, the things you want to do now that you are retired, and the assets you've set aside. Then pay yourself a salary and live within that budget. If that salary is not enough to fund the lifestyle you wish to live, that's when you should consider a Florida reverse mortgage.
5. Spent the money from a Florida Reverse mortgage.
If you take out a Florida reverse mortgage, spend the money. Some people try to hang on to some of it and that isn't a very good practice. You took out the loan because you needed money so spend the money. Since the money you get does accumulate interest, trying to save it makes no sense.
6. The places for everything better be good places.
Diversify in appropriate places. There are different types of investment vehicles and some vehicles only good for set periods of time or for certain conditions. Check the status of your investments periodically and move them around for efficiency.
7. Along with the electric bill and the phone bill, pay the retirement bill.
The "Me" bill is just as important as the other bills but it doesn't get paid like it is just as important. Pay yourself regularly now so you can pay yourself regularly later.
8. Hiring an expert can help, but hiring an expert that takes a gigantic hunk of cash is poor play calling in the later innings.
Paying an expert $5000 to help you make $5,000,000 is a great idea; that $5000 would probably never become a mature investment worth $5 million dollars. But is it wise to pay the expert that amount to make you $50,000 thirty years down the road? Balance the fee versus the possible return on your investment and hire an expert that can work within your scale.
9. Can you really not work for 20 years?
Some people can't wait until they retire; they've got travel plans and home projects that they've been thinking about for a long time. Some people just set a date and when that date comes, they're confused because they never thought about what they were going to do. They may be glad to leave their jobs, but what they didn't realize was that they loved working. Retirement doesn't mean not working, it means doing what you want to do. Make sure your schedule is filled with things to do and if not, maybe you should put off retirement.
10. Enjoy yourself.
If you are not enjoying yourself after you retire, get job. Some people work all their lives and they enjoy it. Get a job that employs you at two-thirds time. There are organizations out there that would love to have your expertise but your price tag is way too high. Look for opportunities.
11. A place for everything and everything in its place.
Make sure your assets are diversified even after retirement. There are people who've placed the bulk of their retirement savings in one vehicle and found that they've had to get a job years after they've retired because a sector of the market took a big hit. Diversification guards against this.
Getting money from a Florida Reverse Mortgage: Lump sum or monthly, or both
You've thought about the decision for quite a while and then decided to take the plunge. You are ready to sign the papers and then the loan officer asked “How do you want the money?”
How do you want the money? You've read about the options, but the money end was so far in the future you hadn't given it any thought until then. Now you really have to think about receiving payments because the reverse mortgage time is now. Let's review how money is obtained from a Florida reverse mortgage.
There are three basic ways you can receive money from a Florida reverse mortgage: line of credit, monthly payments, combination of both.
1. Monthly payments – this is the preferred method of disbursement for most holders of a reverse mortgage. You can take monthly payments in two different ways: payments for a set period or payments for as long as you remain in the house. The “as long as you remain in the house” system of disbursement is so attractive to most Florida residents that it becomes the preferred method of payment. If you live in Florida, you're probably not going to move to some other state and it's safe to say you plan to remain in your home. The payments in a set period will probably be higher than payments in a tenure payment.
2. Line of credit – People take the line of credit option because they don't need the money immediately and they don't want to raise the amount of the their liquid assets. Florida Reverse mortgage money is money you spend, not save. People who opt for this method of disbursement set up withdrawals in amounts previously determined. This option is great for people who are using the reverse mortgage to pay particular bill, like college tuition for their grandchildren.
3. Line of credit plus monthly payments – This is really two types of disbursements since there are two types of monthly payments. You can set up a line of credit with term or tenure monthly payments.
Florida Reverse Mortgage and You
A Florida Reverse Mortgage has responsibilities and advantages for you.
A Florida Reverse mortgage is an income stream that you don't have to pay taxes on but similar to all financial concerns, reverse mortgages do not exist in a vacuum. People have responsibilities and concerns that are affected by a reverse mortgage.
With a Florida reverse mortgage you have a monthly revenue stream. Since the revenue gained from a Florida reverse mortgage is a loan, no income taxes apply. This money also doesn't usually affect Medicare or Social Security payments – an attractive feature of reverse mortgages.
In the past, home equity was untouchable except for two methods: selling the property or getting a loan using the property as collateral. While a great deal of cash can be acquired in either manner, the downside was 1) lose your home or 2) start paying a big debt now or lose your home. When you get older and have a fixed income, you generally like to stay away from the possibility of losing your home.
Today, people now have the option of getting a Florida reverse mortgage. In this option, you do acquire a large debt on which interest accrues and it is more expensive than traditional home financing. You also cannot claim the interest on the loan on your taxes until you settle the debt. The upside is that you don't lose your home and the debt doesn't exceed the value of the home at the time you take the loan. The debt must be repaid if you cease to use the property as your primary residence or if the last surviving borrower passes away. If the home is worth more than the outstanding debt, your heirs will get to keep the difference upon the sale of the home.
The Features of a Florida Reverse Mortgage
What should I know about Florida reverse mortgage?
If you are over 61 years of age and own your principal residence, you are eligible for a Florida reverse mortgage. A Florida reverse mortgage may be the ideal vehicle for people who are on a fixed income and need some extra money to fund projects they want to accomplish in their retirement. For many people, their house is their single biggest asset and the equity remains untapped.
What are the significant features of a Florida reverse mortgage?
The two most significant features of a reverse mortgage is that you retain the title to your home and the loan must be repaid when you or your spouse - whomever lives longer - passes away, sells the property, or no longer uses in the property as their principal residence. Since a reverse mortgage is a loan, the money received is not taxable as income. There are some things to consider prior to taking a Florida reverse mortgage the most important factor being that it is still a home loan and subject to many of the same rules and obligations. Origination fees and closing costs must still be paid to the lender. Like conventional home mortgages, the lender may charge service fees during the whole term of the mortgage. Like conventional home loans reverse mortgage's may have fixed or variable rates. Many times variable rates are tied to a particular financial index and fluctuate with the state of the market. Like a conventional mortgage, the interest rate is tax deductible when you are paying the lender. That means you can only avail yourself of the benefits of tax deduction when you are settling the loan, not while you are receiving funds.
Things you must do after you take a Florida reverse mortgage.
After you take a Florida reverse mortgage, you must:
1. Live in the home.
Yes you can travel and visit all the friends and relatives you want but the property must be your primary residence if you take out a Florida reverse mortgage. If you do not live in the home, the lender can have it sold to repay the debt. This is a big consideration. Do not even attempt to take out a reverse mortgage on a property you don't live in. If you decide to move, which some people do, you must settle the debt with your lender.
2.
Keep the house in about the same condition as it was when you took out the Florida reverse mortgage.
The lender is holding the house as collateral and if the condition is not maintained the security of the collateral is affected. If the value drops, the lender may take the property to repay the debt.
3. Keep all the property taxes current.
The lender puts a lien on the property when he extends a Florida reverse mortgage. Since the loan is the collateral, the lender has a vested interest in the taxes being paid. If the taxes are not paid, the state may seize the property for unpaid back taxes and this is definitely not in the best interest of the lender. Keep the taxes paid or the lender may take the property to settle the debt.
4. Have all housing insurance up to date.
This is also part of the Florida reverse mortgage contract. The lender will never tell you which carrier to use for your insurance, but only that the insurance is adequate and current. If something catastrophic should happen to the property and the insurance was inadequate or non-existent, the lender loses the collateral. If your insurance is not current, the lender may take the property.
