With the well documented fall in real estate values across the state of Florida, many senior citizens are finding that they have significantly less equity in their homes than they had just a year or two ago. For those seniors who are considering, but have yet to apply for a reverse mortgage, the time to act may be now.
The amount of equity that a senior has in their home is the main determining factor in how much money, if any, they may qualify for under any reverse mortgage program. Age, to a lesser degree, also plays a part in qualifying. But a significant change in the amount of money available under a reverse mortgage is seen only when the comparing age differences of at least 10 years. This means that declining equity, such as is common in parts of Florida, is the primary threat to the viability of the reverse mortgage for many seniors who choose to delay obtain the loan.
For example, if a 70 year old senior has a Florida home worth $300,000 and loan on it of $200,000 then she would not qualify for a reverse mortgage. Her only alternative would be to pay down her current loan to about $185,000, so her reverse mortgage funds would be able to pay off the remainder. But, if her home is worth $325,000, then she would not need to pay down her mortgage at all. The reverse mortgage would provide enough funds to pay off her $200,000 mortgage. As you can see, a change in value of $25,000 can make all the difference in the world to a Florida senior.
Some areas of Florida are more susceptible to depreciation of home values than others.
St Petersburg Reverse Mortgages
The city and surrounding area of St Petersburg has seen a decline of nearly 10% in real estate values. Local realtors are reporting that it continues to be a "buyers market" in the area. Translation: home values are headed down for now. With a median home value of $185,000, another 10% decline in one year means the median home price could fall to the mid $160,000 range. Seniors in this area of Florida would be well advised to lock in their reverse mortgage before values fall further.
Fort Lauderdale Reverse Mortgages
Ft Lauderdale has recently seen a 17% decline in the median home value. The median has gone from $385,000 down to the current level of $319,000. Such a reduction can make a huge difference in the amount of money available under a reverse mortgage. A 70 year old senior in Fort Lauderdale would now qualify for about $198,000 under the FHA reverse mortgage program. This amount is down from last year when it was $225,000. How low will it go? It is anyone's guess.
Orlando Reverse Mortgages
Last year, a reverse mortgage in Orlando for a 70 year old senior in a median-value home would have fetched $164,000. This year, due to the 13% drop in home values, the same senior (now 71) would qualify for $143,000, a reduction in the benefit of $21,000. The question for Orlando and other Florida seniors to ask themselves is, can I afford to lose another $21,000 by putting off the reverse mortgage until next year?
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