Understand Reverse Mortgages

If you have a reverse mortgage, you agree to responsibilities, including:

• Paying property-related expenses on time, including:
  • Real estate/property taxes
  • Utilities
  • Hazard and/or flood insurance premiums (if applicable)
  • Homeowners association (HOA) fees (if applicable)
• Living at the property as your primary residence and certifying occupancy annually.
• Maintaining the property in the same condition as when the reverse mortgage loan was obtained.

If you fail to meet your responsibilities under the loan, you may default on your loan, which could result in foreclosure. If you find yourself in that situation, contact your reverse mortgage servicer (the company that sends your reverse mortgage statements) immediately and explain your situation.

Unlike a traditional mortgage, you do not have to make monthly mortgage payments. Loan proceeds are advanced to you through a monthly loan advance, line of credit, or lump sum.

The loan proceeds received by you, along with accrued interest and other charges, increase the loan’s balance and decrease your equity in the property.

If you live in the home as your primary residence, maintain the home, pay property-related expenses on time, and comply with the other terms of the loan, the loan does not have to be repaid.

If the property is sold, or the last surviving borrower no longer lives in the home or passes away, the loan becomes due and payable. Often, the home is sold to repay the loan. A reverse mortgage is a “non-recourse” loan, meaning that in the event of a default, a lender can take action against only the home subject to the mortgage.