Funding for Necessary Expenses

• Reverse mortgages can provide income to seniors, but they do much more. Reverse mortgages can be used to pay property taxes each year on the property, which may be helpful to seniors living in some of Florida's higher-taxed areas, such as the coast. Often, retirees do not have enough income to pay rising taxes on homes that they could afford while they were working. A reverse mortgage can help keep a retiree in their home in this type of situation.
  
  

Spending Your Estate

• If your Florida home is a large part of your estate, you will be gradually spending that estate by taking out a reverse mortgage. If it is important for you to leave your house to your heirs, they will at the least need to pay off the mortgage in order to keep the home. Depending on your mortgage agreement, they may need to purchase the home from the mortgage company, potentially at a significantly appreciated price.
  
  

Spend as You Need To

• While the first reverse mortgages paid a monthly income only to borrowers, today's reverse mortgages offer other options. A borrower can receive the allowable mortgage amount in a lump sum payment. Seniors can also elect to open a credit line with the proceeds, and only tap the money if it is needed. This can be useful if you have unexpected medical expenses, or need to make repairs to your home from hurricane damage. Whatever the option, the mortgage still does not need to be paid back until after you die or move out of the home.
  
  

High Fees

• Reverse mortgages carry an origination fee that can be sizable, up to $6,000. You will also need to pay any closing costs that would be associated with a conventional mortgage as well, such as legal fees and appraisals. Most reverse mortgages also require mortgage insurance, with an initial premium as high as 2 percent of the home's appraised value. In addition, you will probably pay an insurance premium of 1.5 percent of the outstanding mortgage per month. If you carry a $20,000 mortgage balance, that is $300 per month added to this balance, in addition to any interest charges.