Home Equity Line of Credit That a Reverse Mortgage in Florida Provides to the Senior Citizen!

The purpose of this blog will go to discuss the home equity line of credit that a reverse mortgage in Florida provides to the senior citizen.

The home equity line of credit which is available to seniors who take out a reverse mortgage is unique in the fact that the equity line grows equal to that of the interest rate being charged.

So, as an example if a senior has an interest rate and mortgage insurance of say, 6% their individual line of credit with the lender will grow at the same rate. This allows the senior who is using their equity to access more equity in the future based on the amount of interest their current loan is accruing. Florida reverse mortgages all work this way as it pertains to the ARM product with enough equity to qualify.

This also helps the senior to access more cash in the future as expenses continue to rise. most adjustable rate mortgages allow for this provision inside the reverse mortgage program.

However not all seniors will either opt for the adjustable rate mortgage or will get a line of credit if they take all of their cash at closing that is allowed by the guidelines of this program. Therefore seniors need you take this into consideration as it is a safety net for them in the future as it pertains to unforeseen expenses.

To learn more about the equity line option and reverse mortgages please, visit our site at Sarasotareverse.com.

Our website is packed with simple and understandable reverse mortgage information in the way of a video presentation this allows the senior to learn at their own pace with no pressure. it also helps those seniors who may be struggling to read all the fine print on some of the other websites once again we thank you for considering a reverse mortgage and our services.

Also Read About- Sweeping changes in the Reverse Mortgage Market

Case Study: Reverse Mortgage for Estate Planning

Reverse mortgages can be used for more than just supplimental retirement income. The following is an example reverse mortgage scenerio that shows how reverse mortgages can be a powerful estate planning tool.

Sample Reverse Mortgage Case Study

A 75 year old widow with significant assets looking for a way to pay for an insurance policy that will transfer more of her weath to the next generation, without affecting here current income.

Her assets include a $750,000 home (her primary residence), $1,000,000 municipal bond portfolio (herprimary income source), and a $500,000 IRA (from her deceased husband) . She draws $75,000 a year from the municipal bond protfolio, minimum distributions from the IRA, and her social security.

One solution is for her to take out a reverse mortgage. She would recieve $224,657 from the reverse mortgage and use the loan proceeds to purchase a single premium immediate annuity, with the annual net after tax payment equal to approximately $20,000. This $20,000 will be gifted to a Trust. A life insurance policy in the amount of $600,000 is purchased inside the Trust using these gifts.

The reverse mortgage's financial impact to the estate is significant. The reverse mortgage itself will reduce the taxable portion of the estate, while the purchased Life Insurance will increase the non-taxable portion of her estate. This usage of a reverse mortgage will greatly increase the amount of wealth she will be able to pass on to the next generation.

Resource box: For more information visit reverse annuity mortages or the reverse annuity mortgage blog.

Widow Reeling from Reverse Mortgage Equity Grab

The following story shows exactly why you need to understand all terms of a mortgage contract before you sign.

Katherine Stephens and her husband signed up in 1988 for what they thought was a great concept for seniors: a reverse mortgage that would pay them $312 a month virtually in perpetuity -- until they died or moved out of their house.

At the time, Katherine was 76 and Harold was 78. Harold later died, leaving Katherine alone in the house. The $312 checks came in like clockwork every month, until early this year when she moved to the nursing home.

The loan contained an "additional interest provision" which gives the lender the right to 100% of all gains in the market value of the property from the date of settlement to the date of final payoff. At the time of the loan settlement in 1988, the appraised value of the Stephenses' house was $83,500 and is now worth appraised at roughly $500,000.

The current lender Wilmington Savings Fund Society (WSFS) is now damanding that Stephens pay:

• $67,586 for the monthly payouts


• $158,218.19 in compounded interest at 11 1/2%


• 100% of the house appreciation since 1988 that is entitled as "additional interest" under the contract

The total owed would be $642,000 but the contract puts the cap on the payouts to the lender at 100% of the current appraised value of the house, $500,000, less selling expenses.

Bottom line: WSFS wants nearly half a million dollars in compensation for total loan advances of $67,586, dribbled out at $312 a month over 18 years.

This information brought to you by the Reverse Mortgage Guide and Reverse Annuity Mortgage Blog.

Korean Goverment to Back Reverse Mortgages

The South Korean government has decided to provide loan guarantees next year to financial institutions that sell reverse mortgages as part of its efforts to promote the products, the Ministry of Finance and Economy said.

These reverse mortgage loans will allow people to receive a certain amount of money on a regular basis from financial institutions using their homes as collateral, and the ownership of the home is taken over by the lender after the term of this kind of mortgage ends.

According to the ministry, the scheme, introduced in May last year, will help resolve the problems faced by the elderly with low incomes and strengthen the countrys social safety net. Also, the government plans to provide a variety of tax incentives for the products.