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Defining Reverse Mortgage Borrower Responsibilities

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What are your borrower responsibilities with a reverse mortgage?

If you are thinking about, or have already received your reverse mortgage funds, it is important for you to know what are the responsibilities you have as a borrower. The Home Equity Conversion Mortgage (HECM) loan, better known as “reverse mortgage” is a program aimed towards those 62 and older to convert some of the equity in their home into cash. The reverse mortgage process and requirements are notoriously complex, but we are here to help you understand your role as a borrower with your reverse mortgage.

When a borrower applies for a reverse mortgage, they must meet certain responsibilities as required by the lender. If the borrower does not meet the responsibilities, the loan could become due or even worse, up for foreclosure. If you are no longer able to continue to keep up with your responsibilities, you can call your lender to see if they can assist you.

To prevent the loan from becoming due, the borrower must:

1. Live in the property as their primary residence.

    The lender requires that the property used for collateral for the reverse mortgage must be occupied by the borrower(s). If you are hospitalized or move to an assisted-living facility temporarily, you have up to 12 consecutive months of being out of the property until the lender decides the loan will become due.

2. Maintain the condition of the property.

    The borrower is responsible for the upkeep of the home and for making mandatory repairs which is a requirement of the lender. The mandatory repairs are meant to benefit the homeowner as it requires them to adhere to health and safety concerns, protecting the security of the property and maintaining the structure of the home.

3. Pay taxes and insurance.

    Under a reverse mortgage loan, and like most loans – you are still required to pay for taxes and insurance associated with the property. This includes but is not limited to real estate tax, utilities, homeowners’ insurance, hazard and flood insurance premiums, and property taxes.

4. Reverse mortgage must be the primary lien on the home.

    The lender requires the reverse mortgage loan to be the primary lien on the home. If you have any prior liens on the home, you can use your reverse mortgage funds to pay any prior mortgage in full.

A reverse mortgage can be beneficial to your retirement plan and goals. To learn more about reverse mortgages and how you can apply, speak with an advisor at 1-888-808-8486.

About the Author:

I have been working in the reverse mortgage industry for 20-plus years. My goal is to provide consumers the most up-to-date and relevant information about the reverse mortgage industry and how it can affect them.

Thanks so much for reading!

-Alan F.

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Image courtesy of [stockimage] / FreeDigitalPhotos.net

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