A reverse mortgage can eliminate required monthly mortgage payments, but it generally does not eliminate the homeowner’s responsibility to pay property taxes, maintain homeowners insurance, and keep the home in good condition.
Property Charges That May Continue
- Property taxes and special assessments
- Homeowners, hazard, and required flood insurance
- HOA, condominium, or planned-community dues
- Ground rent and certain municipal assessments
- Necessary repairs and maintenance
Some loans may include a Life Expectancy Set-Aside, or LESA, that reserves proceeds for projected taxes and insurance. A LESA is not a gift, is not unlimited, and may not cover every property charge. Homeowners should confirm the arrangement in the loan documents.
What Happens If Charges Are Not Paid?
For an FHA-insured HECM, unpaid required property charges can place the loan in default and may eventually make it due and payable. Homeowners should contact the servicer, a HUD-approved counselor, and appropriate local professionals promptly after receiving a notice.
How to Reduce Risk
- Build a property-charge budget.
- Use automatic payments and reminders.
- Confirm whether a LESA applies and what it covers.
- Review statements and insurance notices.
- Contact the servicer before missing a payment.
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Important Disclosures
Reverse Mortgage Northwest, powered by OC Home Loans Inc., is licensed by the Washington State Department of Financial Institutions, CL-1842513; NMLS #1842513. Reverse Mortgage Northwest is not a government agency. This article is educational only and is not legal, tax, financial, insurance, or housing-counseling advice. HECM counseling may be required. Loan approval is conditional, not guaranteed, and subject to lender review. Borrowers remain responsible for taxes, insurance, maintenance, occupancy, interest, fees, and other loan obligations.