For industry professionals only – not intended for distribution to the general public.
*Borrowers must continue to pay for property taxes, homeowner’s insurance, and home maintenance. ** The Blessing and Challenges of Caring for Older Family Members” – Forbes. 2017. Wed 3 March www.forbes.com/sites/nextavenue/2017/02/16/the-blessings-and-challenges-of-caring-for-older-family-members. These Materials are not from HUD or FHA and were not approved by HUD or a government agency. A reverse mortgage increases the principal mortgage loan amount and decreases home equity (it is a negative amortization loan).
When the loan is due and payable, some or all of the equity in the property no longer belongs to borrowers, who may need to sell the home or otherwise repay the loan with interest from other proceeds. The lender charges an origination fee, mortgage insurance premium, closing cost and servicing fees (added to the balance of the loan). The balance of the loan grows over time and the lender charges interest on the balance. Interest is not tax-deductible until the loan is partially or fully repaid.
Borrowers are responsible for paying property taxes, homeowner’s insurance, maintenance, and related taxes (which may be substantial). we do not establish an escrow account for disbursements of these payments. A set-aside account can be set up to pay taxes and insurance and may be required in some cases. Borrowers must occupy the home as their primary residence and pay for ongoing maintenance; otherwise, the loan becomes due and payable. The loan also becomes due and payable (and the property may be subject to a tax lien, other encumbrance, or foreclosure) when the last borrower, or eligible non-borrowing surviving spouse, dies, sells the home, permanently moves out, defaults on taxes, insurance payments, or maintenance, or does not otherwise comply with the loan terms.