subject: Your Reverse Mortgage Responsibilities [print this page] If you have a reverse mortgage or are considering one, make sure you understand that there are responsibilities that you have, even though you don't have any payments.
What are the things that you need to do to keep your home and not break the rules? First and foremost, you are still responsible to pay your taxes and homeowner's insurance. While there is an option to have money set aside for your taxes and insurance, very few use it. Even if you do use the impound account option, the amount that is set aside only lasts for a specified period or number of years. Once it runs out, you need to start making those payments.
One of the advantages to living in Oregon is you have the option of deferring your property taxes. If you are considering a reverse mortgage, and you want to defer your taxes, make sure you do the loan first. If you don't, you will have to re-apply for the deferral. Deferring your property taxes will possibly free up some very important cash, but don't forget they are just deferred, not waived. They will have to be paid at some point, like upon a transfer of title or if you get a new loan.
Additional items like supplemental insurance (e.g. fire flood earthquake etc.) are not included in your reverse mortgage. You will still need to make the payments as they come due. This also includes the condo fees or association dues or any other property related fees. These are still your responsibility and not paying them could have negative results.
If you take away the largest monthly expense most of us have, that being the mortgage payment, you will have more money available to spend on the other expenses or emergencies life throws at you. If you don't have a mortgage and you do a reverse mortgage, you will see an increase in income or reserves that will cover some other monthly necessities. In either case, it will effectively be an increase in monthly income, since the expenses have been removed.
Finally, your responsibility is to use the home as your primary residence. This is defined as living in the home at least six months of each year. As long as your intention is to owner occupy the property, you will not need to be concerned with tracking the amount of days you are staying there. This is just in place so loans aren't done on second homes or rentals.
As you can see, a great way to reduce your monthly expenses and potentially increase income is by doing a reverse mortgage. It doesn't remove the other obligations that are attached to your properties, and as long as you pay them, you will have a place to live for as long as you choose to live there.
by: David Prulhiere
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