Reverse mortgage in Florida - anyone done it?

[GypsyT]

I'm looking into new ways to secure stress free future and live in the US.

I've been thinking this; Buy a nice home in nice area and do reverse Mortgage right the way for 10 or 15 years.

 

"A reverse mortgage allows consumers 62 or older to supplement their income by converting home equity into cash. While reverse mortgages may sound like a great deal, they are not suitable for everyone."

 

Has anyone done this in the States?

[Celsius]

How does this make even 1 iota of sense?

 

Buy a home for 500k and then do a reverse mortgage and pay annual interest rates of 10%????

[JimTripper]

The bank would only give you cash for the equity, not the price of the home. If you bought at market price there would be no equity for years (assuming the price kept increasing).

 

 

[GypsyT]

Are you kidding?

Wrong forum to ask.... never mind.

"A paid-for house means you have 100% equity in your home"

 

[heybruce]

If you buy the house with a home loan you won't be able to do this until you have built up enough equity in the house to make the reverse mortgage worthwhile.  Unless you buy a house that shoots up in value right away it will take years for the equity to build.

 

If you are considering paying cash for the house then using the reverse mortgage to live on while living in the house (and paying all maintenance, tax and insurance) it might work, but I'm sure there are better ways to invest the cash for a steady income. 

 

BTW:  The bank issuing the reverse mortgage will insist that the house be insured, and Florida has the most expensive home insurance in the US.  That's assuming you can find an insurer willing to insure your house.

[GypsyT]

6 hours ago, heybruce said:

If you are considering paying cash for the house then using the reverse mortgage to live on while living in the house (and paying all maintenance, tax and insurance) it might work, but I'm sure there are better ways to invest the cash for a steady income. 

I'm "Mr CASH" and yes, plan to pay cash. Snow birds are leaving Florida and there are many deals.

NOTE; I'm not looking for investments to get more. Just to secure what I already have and use it most fun and secure way.

 

I'm getting about 5% now for my CDs and hi-interest savings. Some of my US banks are pain and at CD renewal time I must be at the bank. Stupid rules and extra expense.

I'd like to have a house in Ft Lauderdale, Lake Forth or North Palm beach area. However, Ft Lauderdale is getting too expensive. I have some friends there. Airport is excellent too.

I always liked to visit central and south American countries and women are to my taste. my favorite show is "90 day fiance" -:) I wanna be in the show - with others or alone!

 

Thanks for your input

 

[heybruce]

2 hours ago, GypsyT said:

I'm "Mr CASH" and yes, plan to pay cash. Snow birds are leaving Florida and there are many deals.

NOTE; I'm not looking for investments to get more. Just to secure what I already have and use it most fun and secure way.

 

I'm getting about 5% now for my CDs and hi-interest savings. Some of my US banks are pain and at CD renewal time I must be at the bank. Stupid rules and extra expense.

I'd like to have a house in Ft Lauderdale, Lake Forth or North Palm beach area. However, Ft Lauderdale is getting too expensive. I have some friends there. Airport is excellent too.

I always liked to visit central and south American countries and women are to my taste. my favorite show is "90 day fiance" -:) I wanna be in the show - with others or alone!

 

Thanks for your input

 

It looks like you understand the finances and are researching to see if the situation is the best use of your money.  I'm afraid I have no insight beyond the obvious ones I already mentioned.

 

I do advise choosing carefully if you buy anywhere in Florida, and especially carefully considering a purchase in a flood zone  or storm surge zone https://experience.arcgis.com/experience/203f772571cb48b1b8b50fdcc3272e2c.  Most people in Florida live in one or both, though I'm not sure how many are aware of this.

 

Florida has lax building standards and ridiculously high insurance rates.  I'm sure the two are linked.  Whether considering a condo or house check into what building standards, especially regarding hurricane resistance, were required at that time.  I would be especially cautious about older condos, but for a house or condo near the beach I would abide by the Vegas rule:  Don't bring in more than you can afford to lose.  That's also good advice for life in Thailand.

[thaicurious]

On 12/16/2023 at 3:13 AM, GypsyT said:

I'm looking into new ways to secure stress free future and live in the US.

I've been thinking this; Buy a nice home in nice area and do reverse Mortgage right the way for 10 or 15 years.

 

On 12/16/2023 at 11:29 PM, heybruce said:

Florida has lax building standards and ridiculously high insurance rates.  I'm sure the two are linked.

Besides that much of the older Florida construction was actually quite strong, having always been subject to strong storms, and even those can be further hardened (hurricane roof straps, impact windows, lifting above older flood elevations, etc) to approach current building standards)...

 

https://www.insurancejournal.com/news/southeast/2022/10/17/690281.htm

"Florida (today) is known for developing some of the strongest building codes in the nation for wind resilience, largely as a result of the wrenching impact that Hurricane Andrew had on southeast Florida in 1992"

 

To the reverse mortgage itself, keep with your due diligence. Not sure why you'd limit the number of years (unless that's just estimating your remaining days) which might give you more money to draw but also acts as effective balloon possibly requiring repayment prior to death when a tenured (till death) rev mtg will give you protection against repayment for life as long as you don't leave the home (plus conditions apply such as continuing to pay taxes, insurance, maintenance etc. ).

 

Getting the rev mtg is a time consuming (don't believe their 30-day ads, count on many months to accomplish), a total hassle to complete (complying w/FHA rules, invasive questions, lowballed appraisals, etc) and quite expensive relative to other instruments (initial fees, ongoing mtg insurance premiums) but can be well worth it if your situation corresponds to their requirements.

 

An advantage many don't mention besides that you don't have to repay a tenured mtg until after you're dead (& never more than the house value at that time even if you've drawn more) is that you'd have to pay rent or outright to homebase elsewhere, so not only do you get to live in your investment but also you can rent spare bedroom(s) for additional taxable income and also have the house occupied while traveling. A rev mtg does however limit your travel to up to 6 months at a stretch, at which time you need be in residence (an FHA rule) before setting out for another half year.

 

An ideal situation might be finding a property with a main house & guest house (adu--accessory dwelling unit) that you could also rent or simply a duplex which would appraise at full value for the rev mtg but be half rentable, besides even bringing in a roommate to the side you occupy. then you'd effectively have three income sources from one investment (extra unit rent, roommate income and rev mtg monthly income) all while maintaining yourself in your owned home. Note that in Florida the square footage rented out (for the separate unit) would come off homestead and be taxed as a non-homesteaded aspect of your otherwise homestead-protected property.

 

To location, the I-4 corridor (Tampa/Orlando/Daytona) might offer better future appreciation (the metros have already probably tripled in the last decade) as it is set to be one of the next largest megalopolis areas of the country while also offering lower risk (given current knowns, not future climate changes) and so lower insurance premiums than very South Florida which have some of the highest wind rates. Also buying at higher elevations will reduce or eliminate private flood rates.

[2baht]

Where's Florida??? Can I get there by mocy from Khon Kaen??? 

 

 

Edited December 30, 2023 by 2baht

[GypsyT]

1 hour ago, thaicurious said:

A rev mtg does however limit your travel to up to 6 months at a stretch, at which time you need be in residence (an FHA rule) before setting out for another half year.

Thank you very much for good info!

 

I don't need any loans so I assume I'd be free to travel and spend any time I want to at home.

I also don't need any income in future. Just a safe place to live and keep as my base in the US.

I like to be close to Ft Lauderdale or Miami airports since I plan to travel often to Central and South America.

 

Right now up and coming destination seems to be DR, Dominican Republic. Many European developers are building quality apartments and hotels there. The reason? Women... of course -:)

 

[KhunLA]

If you can afford to buy a nice home in a nice area, then why would you need or want a reverse mortgage.  They are designed more for people who actually need money in their later years.

[GypsyT]

One way to simplify life. Moving money around is a pain now. Moving money between countries even more so.

Securing money I need many accounts to keep within insurance amounts. In the EU it's only $ 100k per account, except Norway. There it is $ 196k but they don't allow accounts unless you are a resident.

 

The house has always been the best way to secure funds IF you select smartly the location.

 

 

Edited December 31, 2023 by GypsyT

[Celsius]

 

 

I speak as Canadian, but real estate rules are quite similar in some US states.

 

Insurance will often require that someone lives there for more than 6 months. Renters, family members, you.....

 

There may be an "empty home tax" if your state struggles with affordable housing. If not now, maybe in the future. 

 

There were numerous scams in Canada where criminals were able to separate owners from their property because the home was fully paid off and no one lived there. It was in the news. This scam would be a lot harder to pull off (probably impossible) if there was a mortgage on the property.

 

Just something to think about if you live overseas and house is sitting empty.

 

 

[thaicurious]

2 hours ago, GypsyT said:

Thank you very much for good info!

You're welcome.

 

To yours and other comments:

 

Live where you most want to be of course but just to note that the dollar and distance difference flying to E or W Caribbean & points south from south or central Florida is fairly negligible; I'm guessing $50 & 20 minutes, non-stop flights.

 

As to reverse mortgaging if you don't absolutely need the cash, besides safely banking money in property as noted, if you don't have dependents (and pardon me for presuming but it doesn't sound like the OP is marriage minded) then it's a great way to not leave so much on the table, especially with population continuing to expand in Florida, thus property values likely will continue to gain such that if you don't spend some down now, you could wind up leaving a ridiculous sum on the table at death. If that's you last planned home, it could be worth the excessive costs of getting one to access those funds while also providing a home base.

 

To scamming property, correct that a mtg prob makes that less likely, but also its probably rare in Florida. Also some (if not all, not sure) appraisers offices have owner alerts

 

To the comment on empty home tax in states struggling with affordable housing, um, apparently you haven't met Florida yet. Besides that the Republican government is not quite known for its compassion, numerous 2nd homes in many parts of the sunshine state, are empty but for vacation use

 

https://www.cbsnews.com/miami/news/miami-has-one-of-the-highest-home-vacancy-rates-in-us-study-shows/

"Despite the housing crisis facing South Floridians, Miami still has one of the highest vacancy rates in the U.S., according to a new study.

According to the online lending marketplace LendingTree, the Miami metro area has the second-highest vacancy rate in the country at 12.65%, with 339,451 homes vacant out of the 2,683,497 total units. Miami's vacancy rate is over 5 percentage points the average across 50 of the largest metro areas at 7.22%. Meanwhile, New Orleans is in first-overall with rate of 13.88% and Tampa is just behind Miami at 12.15%."

 

I've not had insurance issues with an empty house. But also a housemate (with the owner being the absentee roommate 6 months at a time) would solve that if were a problem plus would provide additional income more than offsetting the cost of the mortgage.

[heybruce]

20 hours ago, thaicurious said:

 

Besides that much of the older Florida construction was actually quite strong, having always been subject to strong storms, and even those can be further hardened (hurricane roof straps, impact windows, lifting above older flood elevations, etc) to approach current building standards)...

 

https://www.insurancejournal.com/news/southeast/2022/10/17/690281.htm

"Florida (today) is known for developing some of the strongest building codes in the nation for wind resilience, largely as a result of the wrenching impact that Hurricane Andrew had on southeast Florida in 1992"

 

To the reverse mortgage itself, keep with your due diligence. Not sure why you'd limit the number of years (unless that's just estimating your remaining days) which might give you more money to draw but also acts as effective balloon possibly requiring repayment prior to death when a tenured (till death) rev mtg will give you protection against repayment for life as long as you don't leave the home (plus conditions apply such as continuing to pay taxes, insurance, maintenance etc. ).

 

Getting the rev mtg is a time consuming (don't believe their 30-day ads, count on many months to accomplish), a total hassle to complete (complying w/FHA rules, invasive questions, lowballed appraisals, etc) and quite expensive relative to other instruments (initial fees, ongoing mtg insurance premiums) but can be well worth it if your situation corresponds to their requirements.

 

An advantage many don't mention besides that you don't have to repay a tenured mtg until after you're dead (& never more than the house value at that time even if you've drawn more) is that you'd have to pay rent or outright to homebase elsewhere, so not only do you get to live in your investment but also you can rent spare bedroom(s) for additional taxable income and also have the house occupied while traveling. A rev mtg does however limit your travel to up to 6 months at a stretch, at which time you need be in residence (an FHA rule) before setting out for another half year.

 

An ideal situation might be finding a property with a main house & guest house (adu--accessory dwelling unit) that you could also rent or simply a duplex which would appraise at full value for the rev mtg but be half rentable, besides even bringing in a roommate to the side you occupy. then you'd effectively have three income sources from one investment (extra unit rent, roommate income and rev mtg monthly income) all while maintaining yourself in your owned home. Note that in Florida the square footage rented out (for the separate unit) would come off homestead and be taxed as a non-homesteaded aspect of your otherwise homestead-protected property.

 

To location, the I-4 corridor (Tampa/Orlando/Daytona) might offer better future appreciation (the metros have already probably tripled in the last decade) as it is set to be one of the next largest megalopolis areas of the country while also offering lower risk (given current knowns, not future climate changes) and so lower insurance premiums than very South Florida which have some of the highest wind rates. Also buying at higher elevations will reduce or eliminate private flood rates.

"Besides that much of the older Florida construction was actually quite strong, having always been subject to strong storms, and even those can be further hardened (hurricane roof straps, impact windows, lifting above older flood elevations, etc) to approach current building standards)..."

 

https://www.insurancejournal.com/news/southeast/2022/10/17/690281.htm

"Florida (today) is known for developing some of the strongest building codes in the nation for wind resilience, largely as a result of the wrenching impact that Hurricane Andrew had on southeast Florida in 1992"

 

The counties of Miami-Dade and Broward counties in south Florida adopted strict hurricane standards after Andrew.  The rest of Florida did not. 

 

After Hurricane Michael devastated the Florida Gulf Coast community of Mexico Beach in 2018 https://weather.com/storms/hurricane/news/2018-10-18-hurricane-michael-impacts, destroying almost every building that had not been built to category 5 hurricane standards, the state briefly imposed mandatory category 5 standards.  Developers and home buyers complained, and the standards were lowered back to the level that resulted in the devastation. 

 

In 2022 Hurricane Ian leveled numerous mobile homes, some of them on barrier islands, which is idiotic.  Mobile homes don't belong in storm surge areas unless they are truly mobile and can be moved with a few hours notice.  https://www.usatoday.com/story/news/2022/10/01/hurricane-ian-fort-myers-mobile-home-residents/8141577001/

 

There is also the problem of follow-on inspections and regulations.  In 2022 the Surfside condo collapsed, killing 98 people.   The condo was finished in 1981 and serious structural problems were found in 2018, but no action taken.  https://en.wikipedia.org/wiki/Surfside_condominium_collapse

 

There are some places in Florida that currently have adequate building standards, but not the entire state.  That's why I advised checking into the building standards in place at the time of construction.  Buyers need to be especially wary when purchasing real estate in Florida.

[thaicurious]

4 hours ago, heybruce said:

"Besides that much of the older Florida construction was actually quite strong, having always been subject to strong storms, and even those can be further hardened (hurricane roof straps, impact windows, lifting above older flood elevations, etc) to approach current building standards)..."

 

https://www.insurancejournal.com/news/southeast/2022/10/17/690281.htm

"Florida (today) is known for developing some of the strongest building codes in the nation for wind resilience, largely as a result of the wrenching impact that Hurricane Andrew had on southeast Florida in 1992"

 

The counties of Miami-Dade and Broward counties in south Florida adopted strict hurricane standards after Andrew.  The rest of Florida did not. 

 

After Hurricane Michael devastated the Florida Gulf Coast community of Mexico Beach in 2018 https://weather.com/storms/hurricane/news/2018-10-18-hurricane-michael-impacts, destroying almost every building that had not been built to category 5 hurricane standards, the state briefly imposed mandatory category 5 standards.  Developers and home buyers complained, and the standards were lowered back to the level that resulted in the devastation. 

 

In 2022 Hurricane Ian leveled numerous mobile homes, some of them on barrier islands, which is idiotic.  Mobile homes don't belong in storm surge areas unless they are truly mobile and can be moved with a few hours notice.  https://www.usatoday.com/story/news/2022/10/01/hurricane-ian-fort-myers-mobile-home-residents/8141577001/

 

There is also the problem of follow-on inspections and regulations.  In 2022 the Surfside condo collapsed, killing 98 people.   The condo was finished in 1981 and serious structural problems were found in 2018, but no action taken.  https://en.wikipedia.org/wiki/Surfside_condominium_collapse

 

There are some places in Florida that currently have adequate building standards, but not the entire state.  That's why I advised checking into the building standards in place at the time of construction.  Buyers need to be especially wary when purchasing real estate in Florida.

 

Your thoughts on construction in Florida are, um, fascinating.

 

OP, don't bank money in a low lying beachside mobile home on a rented lot. Remember that sand bags rarely ever stop a tsunami. Keep in mind that even lesser hurricanes can produce tornados. And always ask your prospective condo association if there's any unresolved cracks they think you might wanna know about.

[thaicurious]

3 hours ago, thaicurious said:

 

Your thoughts on construction in Florida are, um, fascinating.

 

OP, don't bank money in a low lying beachside mobile home on a rented lot. Remember that sand bags rarely ever stop a tsunami. Keep in mind that even lesser hurricanes can produce tornados. And always ask your prospective condo association if there's any unresolved cracks they think you might wanna know about.

adding: Rating the States – Insurance Institute for Business & Home Safety (ibhs.org)

"Now in its fourth edition, IBHS’s Rating the States report evaluates the 18 states along the Atlantic and Gulf coasts, all vulnerable to catastrophic hurricanes, based on building code adoption, enforcement, and contractor licensing. In the report, published every three years, each state is rated on a 0–100 scale ...

 

2021 RANKINGS

#1Florida

#2Virginia

#3South Carolina

#4New Jersey

#5Connecticut

#6Rhode Island

#7North Carolina

#8Louisiana

#9Massachusetts

#10Maryland

#11Georgia

#12New York

#13Maine

#14New Hampshire

#15Texas

#16Alabama

#17Mississippi

#18Delaware"

(bolding mine)

[heybruce]

13 hours ago, thaicurious said:

adding: Rating the States – Insurance Institute for Business & Home Safety (ibhs.org)

"Now in its fourth edition, IBHS’s Rating the States report evaluates the 18 states along the Atlantic and Gulf coasts, all vulnerable to catastrophic hurricanes, based on building code adoption, enforcement, and contractor licensing. In the report, published every three years, each state is rated on a 0–100 scale ...

 

2021 RANKINGS

#1Florida

#2Virginia

#3South Carolina

#4New Jersey

#5Connecticut

#6Rhode Island

#7North Carolina

#8Louisiana

#9Massachusetts

#10Maryland

#11Georgia

#12New York

#13Maine

#14New Hampshire

#15Texas

#16Alabama

#17Mississippi

#18Delaware"

(bolding mine)

Yet in spite of those building codes there are still mobile home parks in storm surge areas, lots of old construction that doesn't meet modern code, and new construction to replace buildings destroyed by Cat 4 and 5 hurricanes that is not being built to Cat 4 or 5 standards.

[thaicurious]

3 hours ago, heybruce said:

Yet in spite of those building codes there are still mobile home parks in storm surge areas, lots of old construction that doesn't meet modern code, and new construction to replace buildings destroyed by Cat 4 and 5 hurricanes that is not being built to Cat 4 or 5 standards.

 

Hurricanes and earthquakes and fires and tsunamis and ocean rise and burglaries and civil war and maga rallies and speeding through school zones, and domestic violence and racial injustice oh nooos.