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In the last article we discussed reverse mortgage, now in the current article discussion would be on distinctive features of reverse mortgage in Florida i.e. what separates it from other states that offer reverse mortgage.

Florida reverse mortgage: - The State of Florida has more senior citizens then most states in the USA for the reason that the state has pleasing weather conditions all around the year. The total number of old citizens in Florida is estimated to be around 7.5 million.  

Federal Government does not tax the proceeds of a Reverse Mortgage; however, the State of Florida taxes the mortgage twice in the same transaction. These taxes are taxed on the Mortgage and then a Tax stamp is also charged which amounts to a large sum of money being taken from the homeowner, which is not present in any other state of the US.

The three types of reverse mortgage available in Florida are

  • Home Equity Conversion Mortgage (HECM) — FHA insured;
  • Lender insured loans;
  • Uninsured loans.

All the Mortgage type stated above have closing costs and origination fees. In addition, few lenders ask some service charges and administration costs which is disclosed prior to signing the agreement.

Reverse Mortgage Loans (HECM loans) are the loans most people prefer. Since HECM loans have the backing of the Federal Housing Authority, there are some federal safeguards for the borrower. If one takes out a privately insured Florida reverse mortgage, there is a premium charge applied to the loan costs for the insurance. Like the other Florida reverse mortgage loans, all these loans are applied as part of one's loan amount so one is not out of pocket when one obtains the Florida reverse mortgage. This is an advantage and disadvantage at the same time as the loan has an immediate reduction in the equity to pay for the loan costs and interest.

The Florida reverse mortgage lender has to follow all the federal guidelines with the reverse mortgage loan. Moreover, reverse mortgage lenders have to meet certain minimum standards. Reverse mortgage lenders like dealing with the reverse mortgage loan because the federal government (HUD) guarantees them.

No matter which Florida reverse mortgage one chooses to employ as financial tool, one should approach each option fully informed.