Do I Still Have to Pay Property Taxes and Insurance?

Reverse Mortgages do not relieve the borrower of the responsibility of paying property taxes and their home owners insurance. There are requirements that the borrower maintains the proper amount of insurance that the lender requires.

The lender cannot require that the borrower uses a specific insurance company, however they can require the borrower to maintain a certain amount insurance to cover the home due to damage such as fire. This insurance is separate from the mortgage insurance premium charged by FHA. The insurance charged by FHA is so the borrower will never owe more than the house is worth. The property taxes are required to be paid on time as well. It is important to remember to save enough money each month or year to pay these expenses.

A Reverse Mortgage is a Loan that does not have to be Repaid

Because the borrower is not selling their home, the reverse mortgage should not affect their current tax rate. A reverse mortgage is a loan that does not have to be repaid, therefore the property tax is not affected by the loan.

The borrower does have an option to have the lender set aside a portion of the funds that the borrower qualifies for to pay for the taxes and insurance for a set period of time. However, after this period, it is still the borrowers responsibility to pay these.