Question 1

What should Florida homeowners consider before getting a reverse mortgage?

Accepted Answer

Considerations: age factor (the older the borrower, the more they can borrow; waiting may be beneficial), home value (the home must appraise for enough to provide meaningful proceeds after paying off existing mortgages), costs (origination fee up to $6,000, mortgage insurance premium of 2% at closing plus 0.5% annual, closing costs, and servicing fees), alternatives (home equity loan, HELOC, or selling and downsizing may be better options), impact on heirs (the loan balance reduces the inheritance; heirs should understand the implications), and tax implications (reverse mortgage proceeds are not taxable income; but interest is not deductible until paid).

Question 2

How does the Florida homestead exemption interact with reverse mortgages?

Accepted Answer

Homestead interaction: the FL homestead exemption (Article X, Section 4): protects the home from forced sale by creditors. Reverse mortgage: is a voluntary lien (the borrower chose to borrow against the home), so the homestead exemption does not prevent the reverse mortgage lender from foreclosing. However: the homestead exemption does protect the home from other creditors (a judgment creditor cannot force the sale of the home while the borrower is alive). Spousal protection: both spouses must consent to the reverse mortgage (even if only one spouse is on the title; the non-borrowing spouse’s rights are protected under HECM regulations).

Question 3

What happens to a reverse mortgage when the borrower dies in Florida?

Accepted Answer

After death: the loan becomes due (the lender sends a notice to the estate or heirs), the heirs have options: repay the loan and keep the home (pay the lesser of the loan balance or 95% of the appraised value), sell the home (use the proceeds to repay the loan; any surplus goes to the heirs), or walk away (the lender forecloses; the heirs owe nothing because the loan is non-recourse). Timeline: the heirs typically have 6 months to repay or sell (with possible extensions). The probate process: the reverse mortgage lien is addressed in the probate estate; the personal representative handles repayment.

Reverse Mortgage Considerations

Reverse Mortgage Considerations in Florida

Before Applying

Homestead Interaction

After Death

Related Terms

Barnes Walker Estate Planning

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