Taxes and Insurance With A Reverse Mortgage

Do I still need to pay my Portland Oregon property taxes and homeowner’s insurance with a reverse mortgage loan? What about the costs of maintenance necessary to maintain my property?

Answer:

Yes. For those who don’t pay your homeowner’s insurance coverage and real estate taxes, or take care of essential repairs, it’s possible to lose your home to foreclosure.

Just about all reverse mortgages are Property Equity Conversion Mortgages (HECMs). The Federal Housing Administration (FHA), a part of the Department of Housing and Urban Development (HUD), insures HECMs.

With a HECM, if you don’t pay your insurance and property taxes, or if you let the shape of your home to degrade while not doing the repairs necessary to take care of your house, you’ll be regarded in default on your mortgage. In case you don’t work with your mortgage provider to fix your situation, the lender can potentially foreclose on your property, and you can be required to move. Find out about how to proceed if you’re having trouble paying your property taxes and insurance or the expense of keeping up your home in Portland OR.

Part of the process when you apply for a HECM, the mortgage company does a financial assessment during the time of application to help determine your capacity to pay real estate taxes and insurance from retirement income or personal savings. If you don’t have enough other resources, the mortgage lender will probably set aside some of the reverse mortgage proceeds to pay these expenses in the future. A “set-aside” is a percentage of your home loan that’s set aside to pay some real estate taxes, homeowner’s insurance, and fees.

Set-asides help to make sure you’ll have enough cash to make these payments in the coming years. But remember that you could possibly face foreclosure if you ever exhaust money to pay property taxes, homeowners insurance, or other property-related charges in the coming years, even if you have set up a set-aside account.

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