Reverse Mortgages FAQ - Part 2
Home equity is a valuable asset for multiple reasons. As one example, homeowners are able to turn their equity into cash via second mortgages. Also called reverse mortgages or home equity loans, these loans essentially enable you to borrow money against your house, so you can take advantage of your equity without having to sell your home.
11. If My Spouse Is Not 62, Will They Remain On The Title?
Last week, our blog featured answers to some frequently asked questions about reverse mortgages. This week, we're here to finish the conversation with answers to a few more common questions.
Reverse Mortgage FAQ (Part 2)
8. Am I Responsible For Paying My Homeowners Insurance & Property Taxes
Taking out a second mortgage does not change any of your other responsibilities associated with homeownership; you will still be required to keep your insurance and property tax current at all times. In some situations, lenders can impound your taxes and insurance and pay them for you when they become due.
9. Does My House Have To Be In Prime Condition In Order For Me To Receive A Reverse Mortgage?
Before you can take out a loan, an appraiser will appraise the house according to the FHA guidelines or the lender's guidelines (depending on the reverse mortgage program you're using). If the house needs to be repaired, the lender may require you to fix it prior to closing. If they allow you to repair the home after closing, a repair set-aside may be issued.
10. What Is A Repair Set-Aside?
If repair work is done after the close of escrow, the lender will hold one and a half times the amount of money it costs to repair the item. Once the work has been completed, a final bill will be submitted to the lender, which will disburse payments to the appropriate parties.
11. If My Spouse Is Not 62, Will They Remain On The Title?
In order to receive a second mortgage, all individuals on the title must be at least 62 years old. If you are thinking about removing someone from the title in order to obtain a second mortgage, we recommend you seek legal counsel and talk to a tax consultant first to fully evaluate your particular situation.
12. Does A Non-Borrowing Spouse Need To Sign Any Documents
Yes. A non-borrowing spouse will have to sign a Non-Borrowing Spouse (NBS) Certification, Notice of Right to Cancel Riders (if necessary), Truth in Lending, the HUD, and the Deed(s) of Trust. If there is a trust on the property, additional signatures may be required.
13. Does The Bank Hold Title To My House While My Reverse Mortgage Is Outstanding?
No. The person receiving the mortgage must be on the title throughout the course of the loan.
14. Am I Limited As To How I Can Use The Money I Receive From A Reverse Mortgage?
Good news - you are able to use your money however you would like! In the past, borrowers have used reverse mortgages for any number of different things, such as vacations, healthcare, home modifications, new cars, education for grandchildren, or as a supplement for retirement income. It's your money to use as your wish - the choice is yours.
Good Luck On Your Journey!
Taking out a second mortgage is a big decision, but it can be a great financial move in the right circumstances. If you missed last week's blog with other answers to frequently asked questions about reverse mortgages, you can view it here.
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Contact Arrowhead Title, Inc. to begin your title insurance process today!
The Lake of the Ozarks' Most Trusted Title Company
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