Responsibilities and Requirements of Reverse Mortgages
Reverse mortgages are a great way for seniors to be able to access and enjoy the equity they have built into their homes. However, they come with certain responsibilities that borrowers must fulfill. Here, we will discuss the various responsibilities and requirements of reverse mortgages and what borrowers can do to stay in good standing throughout the life of the loan.
To learn additional information about the responsibilities and requirements of reverse mortgage borrowers, get in touch with us by calling (800) 480-6828 or contact us online. Our friendly representatives will help explain the reverse mortgage requirements in a way that is simple and easy to understand.
Important Requirements of Reverse Mortgages
In order to close on a reverse mortgage, a borrower needs to prove that he or she:
- Is at least 62 years old
- Has sufficient equity in the home
- Resides in the home as a primary residence
However, the responsibilities and requirements of reverse mortgages do not end at closing. The borrower has ongoing obligations to maintain the loan in good standing.
Maintenance Requirements of Reverse Mortgages
During the life of the reverse mortgage, the borrower must keep the home in good condition. The borrower should make sure the property is well kept, and any necessary repairs are undertaken (at the borrower's expense). The home is the collateral that will be used to pay back the loan when the borrower leaves the house, so it is important to retain its value. Failure to maintain the house could be considered a violation of the loan agreement, triggering a default.
Payment Requirements of Reverse Mortgages
Homeowners are responsible for the financial upkeep of their homes as well. The borrower must pay all property taxes, insurances, dues, or fees related to the property for the life of the loan.
- Property taxes must be paid according to the schedule set by the town or village that collects the taxes.
- Borrowers must maintain a homeowner's insurance policy, and pay all policy premiums. Homeowners insurance covers hazards like fire, natural disasters, vandalism, and theft.
- Home Owner's Association ("HOA") fees must be paid, if required, along with any community or association dues that may be associated with the property.
Consequences of Ignoring the Requirements of Reverse Mortgages
Borrowers must maintain these requirements and make the necessary scheduled payments in order to avoid being found in default of their loan. If the homeowner fails to meet the requirements, repayment of the reverse mortgage loan may become due. If borrowers are concerned with their ability to pay these expenses, loan officers can provide reverse mortgage counseling to assist borrowers in withholding or setting aside funds to cover these expenses throughout the life of the loan.
Learn More About the Requirements of Reverse Mortgages
If you need help understanding the reverse mortgage requirements, a friendly representative from Citizens Lending Group is here to provide you with more information. Call us today to ask for more information or reach out to us via our online form.