Equity Shortfalls, The Senior’s Biggest Fear!

What will happen in the event of an equity shortfall on a reverse mortgage in Florida?

This is one of the primary questions that I get from a borrower.

There are two ways an equity shortfall can happen. One there can be a large decline in the value of the home. Two, the senior can live longer than the life expectancy based on the actuarial charts.

In either of these cases lender only has recourse against the actual asset, or the home.

This should be very good news to any senior considering a reverse mortgage. In other words the senior does not have to worry if the value of the home drops or they live longer than expected and they accrue more interest and mortgage insurance as part of the reverse mortgage.

FHA mortgage insurance is set aside to cover any of the shortfalls in either of those two scenarios. So, because this is a non-recourse loan the only recourse any lender has is against the actual asset which is securing this particular reverse mortgage loan.

That asset is the home and in the event of a decline or short fall in value, it is the only asset the lender has to come against. So every senior now can have the peace of mind knowing that no matter what the situation they can live in their home and never have to worry about a deficiency judgement for them or the ones they love, their heirs.

So to simply explain this to the average senior, it doesn't matter what you owe on your home at the time of sale. If you owe more than the value of your home the FHA mortgage insurance will cover that short fall for you and or your heirs.

Another common question is the costs associated with a Reverse Mortgage Florida are the costs associated with paying off that loan at the time of sale. Many seniors are under the misconception that there are additional costs over and above that of a traditional FHA and conventional loan. This is simply not true.

There are no additional costs associated with paying off a reverse mortgage as it compares to any other mortgage loan. This fact should, once again give the senior more peace of mind that no one including themselves or their heirs, will get a financial surprise in this process. All of this is clearly documented in the material any senior receives. However because the material is often 70 or 80 pages long most seniors don't read it all.

In summary we are dealing with a non recourse loan so therefore there are no deficiency judgments or financial surprises to you or your heirs and also there are no additional costs to pay off that loan other than the loan amount and the accrued interest in mortgage insurance.

I am expert Article writer and have lot of experience in mortagage related. Hope you like this article. IIf you like this article do comment on it.