Sell To A Fl Cash Home Buyer
A third option is to sell to a cash home buyer like Florida Cash Home Buyers. A cash home buyer could be a single investor or a group of investors that purchase houses with cash. When selling to a cash buyer, they can close a lot quicker than a traditional buyer since they are not waiting on bank financing. Another advantage of selling to cash home buyers is that they purchase homes in as-is condition. Saving you time and money on costly home renovations. When selling a house with a reverse mortgage, the process is very easy compared to the other ways to sell a home.
Homebuyers are very helpful if you want to sell quickly and avoid making costly repairs in a house you wont be living in anymore. Since their process doesnt involve real estate agents, there arent any agent fees or commissions. Homebuyers usually help pay closing costs and even work with you on your closing and moving timeframe. Working with a homebuyer takes the stress and hassle out of the process.
If you still arent sure if selling to a home investor is for you, below are 8 reasons to sell a house with a reverse mortgage for cash in Florida.
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Paying Off The Balance
Heirs or the homeowners themselves can pay off the balance due to keep the home after a maturity event. It usually requires some kind of alternative financing, as well as notice to the reverse mortgage lender.
If youre inheriting the home, youll still need to respond to the lender within 30 days of receiving the due and payable letter. You can usually set up a payment plan. Heirs are typically allowed six months to repay the debt.
How A Reverse Mortgage Works
A reverse mortgage allows homeowners 62 and older to tap into their home equity without selling their homes or taking on monthly debt payments.
Instead of making mortgage payments to a lender, a reverse mortgage makes the lender pay you . Theyâll pay out a portion of your home equity as a lump sum, monthly installments, or a revolving line of credit.
A reverse mortgage is a loan. So youâll be responsible for repaying what you borrow when you move out or no longer live in the home as a primary residence.
Youâll also pay fees and interest. These are rolled into your balance, which youâll pay at the end, not during the life of the loan.
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Trigger A Maturity Event
Since selling the home is a maturity event, that essentially takes care of step one.
Depending on the lender, either the date that you list the house for sale or the date you accept an offer will be considered the date of the maturity event.
However, its wise to contact your loan servicer when you decide to sell so you can confirm the loan amount youll need to repay. Its also a wise idea to notify them asap because the list date or offer date are not always the date of the maturity event.
If youre selling because the borrower has passed away or is no longer residing in the home, then its the date that the home was last occupied by the borrower, or the date of death of the last surviving spouse.
Why does the date of the maturity event matter? Check out step two.
A Spouse Is Not Forced To Pay Off A Reverse Mortgage Upon Death
Your spouse will not be forced to pay off the reverse mortgage loan upon your death. Until 2013, many reverse mortgage lenders would require the borrowers surviving spouse to repay the loan when the borrower passed away.
HUD policies allowed lenders to behave this way, leading many widows and widowers to wind up in impossible situations ultimately into foreclosure. It was such a problem that a legal case was heard on the issue by a federal court in Washington, D.C.
The court struck down the HUD policies, and from that point onward, lenders no longer attempted to collect from widows and widowers. Now the last surviving borrower is not put in a precarious financial position.
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For Reverse Mortgage Loans With Case Numbers Assigned Before August 4 2014
As explained in more detail below, after you, the borrower, die or move into a healthcare facility for more than more than 12 consecutive months, your lender or servicer can choose to either:
- Foreclose on the home, or
- Enter a process called Mortgage Optional Election Assignment that allows an Eligible Non-Borrowing Spouse to stay in the home.
Reverse Mortgage And Home Equity Release
How to decide if home equity release is right for you
Page reading time: 9 minutes
If you’re age 60 or over, own your home and need to access money, releasing equity from your home may be an option.
There is risk involved and a long-term financial impact. Get independent financial or legal advice before you go ahead.
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Important Notes To Keep In Mind Regarding Your Choice To Sell Your House As Is With A Reverse Mortgage
- Understand the lien placed on your before you make the .
- Have in mind that if a maturity event is triggered and you need to pay off your reverse mortgage, you will never owe the lender more than 95% of what the current appraised value, or the unpaid loan balance is whichever is less.
- Your lender will give a quote for what proceeds will be left after the sale of your house, but this estimate could expire.
- Heirs who would prefer to keep hold of the property than sell it with a reverse mortgage, could be able to get alternative financing.
- Ensure that your property is maintained according to FHA housing standards before you list your house as is on the market. This means there are no repairs that need doing to your electrical system, your roof, and major systems like water heaters are in good working order.
Shopping For A Reverse Mortgage
If youre considering a reverse mortgage, shop around. Decide which type of reverse mortgage might be right for you. That might depend on what you want to do with the money. Compare the options, terms, and fees from various lenders. Learn as much as you can about reverse mortgages before you talk to a counselor or lender. And ask lots of questions to make sure a reverse mortgage could work for you and that youre getting the right kind for you.
Here are some things to consider:
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Our mortgage reporters and editors focus on the points consumers care about most the latest rates, the best lenders, navigating the homebuying process, refinancing your mortgage and more so you can feel confident when you make decisions as a homebuyer and a homeowner.
What Happens When You Sell A Home With A Reverse Mortgage
You may voluntarily sell your home anytime during the period of the reverse mortgage. If you sell for at least the loan balance, the loan is considered to be fully paid, and you may keep any money left over after youve paid the lender. If you owe more on your reverse mortgage than the home is worth and you sell for the appraised market value, your mortgage insurance will cover the remaining balance.
Payments you receive on a reverse mortgage arent considered income, and you dont have to pay taxes on these payments. If you sell the home, the amount you must pay back will include interest on the loan. You may be able to deduct this interest by including it on Schedule A of your income-tax form for the year when you sell the home and pay back the mortgage.
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What You Need To Know About Reverse Mortgage
Are you stuck with a mortgage that you can no longer afford to pay? If so, then you may be wondering if you qualify for a reverse mortgage. A reverse mortgage is basically a loan that allows homeowners to cash in on the equity of their home. The money can be used for anything they want, whether its to supplement their income, pay off debts, or cover the costs of home repairs.
Reverse mortgages are for borrowers aged 62 or older that seek to use them to borrow against the equity in their homes. The loan doesnt have to be repaid until the borrower dies, moves out of the house, or sells the property.
This type of loan is beneficial for those homeowners that dont have sufficient retirement savings or income to cover their living expenses. If you qualify for a reverse mortgage, it could provide you with the financial security and peace of mind that you need.
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It Is Possible To Live Longer Than The Equity In Your Home
Reverse mortgages are usually best for older seniors. If you live long enough, you can find yourself in a bad situation where the equity in your home is gone.
However, you still need living expenses that you can no longer get from the reverse mortgage. This type of loan should be part of an overall plan for supporting yourself in your final years, not an easy solution to fill in your income before you figure something else out.
Make sure you completely understand your finances before committing to these types of mortgages. I cannot emphasize this enough If need be, you should meet with a qualified financial planner who can detail potential financial circumstances you may face.
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Establish A Repayment Plan
Technically, repayment of the reverse mortgage is due immediately when a maturity event is triggered, say when the borrower sells the house, moves into an assisted care facility, or passes away.
However, depending on the lender and the terms of the loan, youll likely have up to six months to repay the reverse mortgage loan.
The estate has six months to sell the property, with two optional three-month extensions, explains Kennedy.
Its very important to keep the loan servicer advised of the process and demonstrate that the home is being actively marketed or financing is being actively pursued to avoid any legal ramifications.
Dont forget that the main legal ramification is foreclosurewhich takes the home sale process out of your hands.
So if you need more time, be sure to make your extension request well in advance, and ask for written verification of the extension approvals from your loan servicer.
How Do Reverse Mortgages Work
When you have a regular mortgage, you pay the lender every month to buy your home over time. In a reverse mortgage, you get a loan in which the lender pays you. Reverse mortgages take part of the equity in your home and convert it into payments to you a kind of advance payment on your home equity. The money you get usually is tax-free. Generally, you dont have to pay back the money for as long as you live in your home. When you die, sell your home, or move out, you, your spouse, or your estate would repay the loan. Sometimes that means selling the home to get money to repay the loan.
There are three kinds of reverse mortgages: single purpose reverse mortgages offered by some state and local government agencies, as well as non-profits proprietary reverse mortgages private loans and federally-insured reverse mortgages, also known as Home Equity Conversion Mortgages .
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What Are The Costs Involved With Reverse Mortgages
A reverse mortgage has similar fees and expenses to a traditional mortgage loan product. You will be expected to pay the following:
- Origination fees.
- Points if you decide to pay them for the chance to have a lower interest rate.
It will be prudent to speak to multiple lenders just as you would with any other loan. Youll want to compare costs and pick the lender that offers the best mortgage terms and conditions. The closing costs, appraisal fee, and mortgage insurance premiums could be higher with one lender vs. another.
Tip #: Never Pay More Than The Home Is Worth On Your Loan
HECMs are non-recourse loans insured by the Federal Housing Administration , which means that borrowers will never be forced to pay more than the home is worth. If youre interested in selling a home with a reverse mortgage, but the real estate market has sunk and your loan balance is higher than the property value, you will only be responsible for repaying 95 percent of the homes appraised value. A lender cannot seek debt repayment through other assets aside from the home.
If you are considering selling a home with a reverse mortgage, use the appropriate FHA appraisal form to learn the value of your property and compare it against your loan balance. Mortgagees must obtain an appraisal of the property no later than 30 days after:
- Providing notice that the reverse mortgage is due and payable
- The mortgagor, their estate, heir, or another legal entity requests an appraisal in connection with a pending sale
- The mortgagee becomes aware of the death of the last surviving borrower
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How Is Selling A Home With A Reverse Mortgage Different Than Selling Traditionally
While the process is mostly the same, there are a few key differences when you sell a home with a reverse mortgage.
Equity is going in reverse: With a traditional mortgage, youre gaining equity every month as you pay your principal. With a reverse mortgage, youre losing equity and increasing your debt each month as youre paid. This minimizes the amount youll net at resale.
Non-recourse loan: Since reverse mortgages are backed by the federal government, theyre usually known as non-recourse loans. This means that neither you nor your heir will owe more money than the homes value essentially, you cant go underwater on a reverse mortgage home .
Due and payable letter: When you sell a reverse mortgage, you work with the lender to set a time frame to sell and agree on a fair sale price more on this later.
If You Are Considering A Reverse Mortgage Consider The Following Tips:
Look at all of your options. If you need some cash, you may have other and cheaper options. For example, a traditional home equity loan or line of credit may be a better option for you.
Review costs and fees. Reverse mortgages may be costly. Lenders sometimes charge up-front origination fees and closing costs. A reverse mortgage can be expensive, especially if you only plan to live in your home a few years.
Shop around. As with any purchase, shop around for the best price. The costs associated with a reverse mortgage, including interest rates, closing costs, and origination fees, can vary among lenders.
Beware of sales gimmicks. Be extremely cautious if anyone tries to sell you somethingâbe it a new roof or a financial product like an annuity or long-term care insuranceâand suggests that you pay for it with a reverse mortgage. A lender, broker or originator cannot require you to purchase an annuity, investment, life insurance, or a long-term care insurance product as a condition of obtaining a reverse mortgage loan.
Beware of fear tactics. Some unscrupulous agents use fear to push their products. Be skeptical of agents who use fear of going into a nursing home or running out of money to sell you a reverse mortgage. Beware of lenders or agents who falsely tell you that the government has somehow endorsed the sale of reverse mortgages.
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What Are The Different Types Of Reverse Mortgages
There are three types of reverse mortgages:
- Home equity conversion mortgages are the most common type, and they are insured by the Federal Housing Administration .
- Single-purpose reverse mortgages are issued by some state and local governments and nonprofit organizations. They must be used for a specific purpose, such as home repairs or paying taxes.
Reasons For Exiting A Reverse Mortgage
There may be personal or financial reasons someone would want to get out of a reverse mortgage. Some common reasons include:
- You may need to move into a nursing home or assisted living.
- You have buyers remorse.
- You realize your reverse mortgage proceeds arent enough to stay current with your homeowners insurance, property taxes and home maintenance costs.
- Youve decided you want to leave the home to your heirs and dont want them to have to purchase it.
- You live with someone who is not on the loan, and they could be kicked out of the home if you pass away or move out.
- You no longer need the financial assistance of a reverse mortgage to supplement your income or make repairs to the home.
Whatever your reason, know that you have options. Taking the time to consider why you want out of this type of loan will help you choose the right way to do so.
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