Questions to Ask Concerning a Reverse Florida Mortgage Loan

Mostly reserved for retirees, a reverse mortgage is a popular financial resource. But is it right for you?

“When we try to plan for the future, there are so many unknowns,” said Jim Mahoney, chief executive officer for Financial Freedom Senior Funding Corp. “The equity in the house is a nice cushion. That’s the main reason why we like to look at [a reverse mortgage] as a last resort.”

Moreover, many consumers considering a reverse Florida mortgage decide against it because they want to leave their house - or the equity built up in it - to their heirs.

No matter where you fall, here are questions to ask yourself on the topic:

1. Is downsizing a better option? As part of their due diligence, homeowners should seriously look at selling and moving as a way to tap home’s equity, said Ken Scholen, director of the AARP Foundation’s Reverse Mortgage Education Project.

Those who do will sometimes realize they could get more for their home than they thought or that another living situation is more attractive. Or maybe their best option is to stay in the current home.

2. How long do you plan to stay in the house? A reverse mortgage doesn’t make sense, for example, for someone planning on moving two years in the future.

3. What are your financial needs and how would a reverse mortgage help you? If the mortgage is being considered to supplement a rainy day fund, it might be best to consider a line of credit that can be tapped when it is needed. If money is needed for a shorter period of time, maybe a Florida home equity loan is a better choice, Scholen said.

4. When do you need the loan? In addition to waiting for less expensive products in the pipeline, remember that homeowners are eligible for more money the older they are and the more their house is worth. This may cause you to wait to apply for any new Florida home loans.