Reverse Mortgages, Insurance, and Taxes

Reverse mortgages appeal to many seniors because they don’t have to repay the money borrowed until they move or die. But there are some circumstances that can result in you paying off a reverse mortgage early.

No Monthly Mortgage Payments

A reverse loan doesn’t require you to make payments on your outstanding balance every month. This allows seniors to keep more money in their wallet for other purposes, such as medical bills, long-term care insurance, home repairs, etc. Even if you receive reverse mortgage proceeds through a line of credit you won’t be required to pay back what’s owed until you leave the home.

Keep Up Insurance Payments

Not paying for homeowners insurance, however, can result in reverse mortgage lenders requiring you to pay back a loan early. Make sure that you maintain an affordable homeowners insurance policy so you can keep up with the payments. Shop around for a new insurance policy if you’ve had the same one for years. You may be able to save money by using the same insurance company for homeowners and auto insurance, or any other types of policies you carry.

Reverse Loan and Property Taxes

Reverse mortgage lenders also require that property tax payments be up to date. Property taxes are usually paid quarterly, so make sure you put aside enough money for when the due date approaches. As a senior citizen you may qualify for some kind of break on property taxes depending upon where you live. Check with your local government to find out what type of assistance you may be eligible to receive.

If the only reason for taking out a reverse mortgage is that you need help paying property taxes or maintaining your home, look into single purpose reverse mortgages. These low-cost reverse mortgages are reserved for low0income seniors and administered by local governments and charitable organizations.

To get more information about reverse mortgages and terms for repaying them, talk with a housing counselor. You can search for a reverse mortgage counselor approved by the Department of Housing and Urban Development at the agency’s Web site.

This entry was posted on Tuesday, May 4th, 2010 at 7:05 pm and is filed under Reverse Mortgage . You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.