So in 2006, Kahl decided to get a reverse mortgage. She used the proceeds to pay off her existing mortgage. And her reverse mortgage doesn’t have to be repaid until Kahl, who is now 83, either dies or sells her home.
“It’s the best thing I ever did,” she said. “Had I not done that, I would have lost my house. Now I am in it until they take me out in a box. And I don’t have a house payment.”
Reverse mortgages allow homeowners 62 or older to tap into the equity in their homes to get cash to supplement their incomes. Borrowers can opt to receive either lump-sum payouts or monthly checks. While interest accrues, homeowners don’t have to make any payments while living in the house. Lenders are repaid when the houses are sold, either after the borrower dies or moves out. Any extra money after the sale goes back to the borrower or his or her heirs.
Nowhere in the country have the loans been more popular on a per capita basis than in Florida. Homeowners in the Sunshine State account for about 70,000 of the 542,000 reverse mortgages nationwide, according to the U.S. Dept. of Housing and Urban Development. Only California, with 92,000 loans but twice as many people as Florida, has more.
Reverse mortgages have been making news in recent months as the two biggest players in the industry, Bank of America and Wells Fargo, announced they no longer would issue new reverse mortgages. And recent reports suggest several thousand homeowners with reverse mortgages haven’t been paying their property taxes or insurance bills as they agreed to. That leaves them in technical default of their loans and at possible risk for foreclosure, though none have lost their homes.
These developments do not mean reverse mortgages, which grew in popularity over the past decade, are going to go away.
Cindy Merrifield has helped hundreds of homeowners get reverse mortgages, first as a lender for 18 years and now as a counselor with Consumer Credit Counseling Service in Rockledge.
Source http://www.floridatoday.com/
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