Prepare Yourself For Your Reverse Mortgage Responsibilities
A reverse mortgage loan is an excellent option for seniors on a fixed income who are looking to control their monthly expenses. While this option is a more carefree alternative to homeownership, there are still responsibilities the original owner must abide by. Make sure you know what's required of you if you plan to take out one of these mortgages for your property.
Homeowner's Insurance
There is sometimes the misconception that once you agree to a reverse mortgage, you are no longer responsible for the property, but that is a false idea. Reverse mortgage companies don't take possession of the property until each person listed on the loan is deceased.
Up until this point, any damage to the house is the responsibility of the original owner. Unless you want to come out of pocket to pay for storm damage, theft, or another unexpected event, you need to maintain insurance. In many cases, the reverse mortgage company will require the homeowner to maintain a policy to protect their interest in the property.
You should be able to maintain the existing policy you had on the property before the reverse mortgage. So, if you're already used to paying this expense and you no longer have to pay a mortgage, you should have no problem maintaining your insurance policy.
Association Fees and Taxes
As stated earlier, as long as the original owners remain in the property, it is their responsibility to maintain the house, including any ownership fees. First, if your home is located in an area that has a homeowner's association, you will be expected to continue to pay the fee on a monthly or annual basis.
If you do not pay the fees, the HOA could put a lien against the property, which could affect the value of the house. In terms of taxes, you will also need to pay your property taxes each year. If you do not pay taxes on the property, the government could seize the home, which would put the reverse mortgage company's interest in the property at risk.
You should also know that a reverse mortgage company will also want verification that you are up-to-date on your property taxes before they enter into an agreement with you.
The more prepared and informed you are about the reverse mortgage loan process — the better your experience. Best of all, you'll be able to sit back and relax without worry and experience the benefits of living mortgage-free.
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