Basics

• A reverse mortgage allows a senior homeowner to use the equity in her home as collateral. It is a loan that is not due until the homeowner no longer lives at the property. The house must be well maintained and all taxes paid throughout the duration the homeowner lives in the home. The homeowner uses the loan to pay off the remaining mortgage, meaning she doesn't have to make monthly mortgage payments. After the homeowner leaves, he must pay off the balance with the proceeds from selling the house. In the event of death, the estate repays the loan.
  
  

Eligibility

• There are two essential requirements for a reverse mortgage in Florida. The first and most important criteria is age. The homeowner cannot be any younger than 62 years old. Secondly, the homeowner must have an appropriate amount of equity in his home, usually about 40 percent. Some items that would typically impact a mortgage application do not affect eligibility, such as income.
  
  

Costs

• The three primary costs for a reverse mortgage in Florida are mortgage insurance from the Federal Housing Authority, title fees and the origination fee. Mortgage insurance covers such things as the FHA taking over the loan if the lender gets into financial trouble. Title insurance is the highest cost of title fees, which also includes title settlement and title search/exam. The originator fee is the lender profit from the reverse mortgage, but the FHA sets limits, such as a maximum of $6,000.
  
  

Benefits and Drawbacks

• Floridian seniors can have many benefits from a reverse mortgage, though some cons do exist. Some pros include the ease to qualify, the ability to stay in the home permanently and the mortgage cannot go upside-down or underwater. A drawback to a reverse mortgage is potentially higher insurance costs. Furthermore, the program is not well understood or known about by seniors in Florida.