What Will I Be Responsible For After I Get A Reverse Mortgage?
Reverse mortgages have helped millions of seniors live more plentiful lives as they age. Homeowners and their spouses over the age of 62 are eligible for Home Equity Conversion Mortgages (HECM). But while they will not have a monthly mortgage payment to pay, they are still responsible for some financial obligations regarding the home. These include the following:
Just as with a conventional home loan, a reverse-mortgage homeowner is always responsible for paying their property taxes. Your particular county or city may have a program that allows you to defer a portion of your property tax. Homeowners can contact their county human services office for more information.
Again, just as with any conventional home loan, reverse mortgage holders are required to purchase and maintain homeowners' insurance. This yearly expense is something that should be discussed with your lender and a reverse mortgage counselor to ensure that the homeowner understands their options and a plan is put in place to keep the insurance current.
The homeowner(s) or their family will be responsible for continuing to maintain and provide upkeep on the home. Because a reverse mortgage uses the equity available in the home to make its monthly mortgage payments, the homeowners will not be eligible for a home equity loan or similar vehicle to obtain funding for major home repairs if they are needed. It’s important to keep this in mind, especially if homeowners elect to receive their reverse mortgage funds in one lump sum. Again, discussing this with your lender can help ensure that you have planned to have funds available should a major home repair be needed.
Ultimately, understanding and planning for these expenses is the key to being prepared in the years to come. Working with and asking questions of a reputable reverse mortgage lender, as well as a reverse mortgage counselor, can help alleviate any concerns a homeowner might have.
A version of this blog was previously published at Janice Cohen: Los Angeles Reverse Mortgage Specialist.