Insurance

If you have a reverse mortgage or are considering one, make sure you understand that there are responsibilities that you have, even though you don't have any payments.

To keep from breaking the rules so you can keep your home, the following things must be done. You are required to pay your insurance and taxes. If you are one of the few that opted to have taxes and insurance money set aside in an impound account, be aware that it only lasts for a specified number of years. After that, you will need to pay the taxes and homeowner's insurance on your own.

If you live in Oregon, you may be able to defer your property taxes. You will want to do it after you get your reverse mortgage, or you will have to reapply after it is closed. But this is a way you can restrict some of the cash flow that has been leaving your household. Be aware that it will have to be paid someday, like when you get a new loan or if your transfer the title of your home.

Additionally, items like flood, fire, hurricane and earthquake insurance are still your responsibility to pay. Your reverse mortgage does not include these payments, so you will need to continue making them. This includes any condo or association dues associated with the property or anything else your area may have that is property related.

Since most people's largest expense is the monthly payments on their mortgage, the great news is that these payments are going away. You will see a big difference in your monthly out go, effectively making your other expenses more affordable. If you don't have a mortgage, your monthly out go won't change, but you will have access to reserve funds that will help you with other monthly expenses.

Finally, your responsibility is to use the home as your primary residence. This is defined as living in the home at least six months of each year. As long as your intention is to owner occupy the property, you will not need to be concerned with tracking the amount of days you are staying there. This is just in place so loans aren't done on second homes or rentals.

As you can see, a great way to reduce your monthly expenses and potentially increase income is by doing a reverse mortgage. It doesn't remove the other obligations that are attached to your properties, and as long as you pay them, you will have a place to live for as long as you choose to live there.