Reverse mortgage loan terms require the borrower(s) to occupy the home as the primary residence, pay for the maintenance and upkeep of the home, pay property taxes, homeowner’s insurance, and homeowner’s association dues, and comply with the terms within the loan documents; otherwise, the loan becomes due and payable and can result in the loss of the home. Although property costs may be substantial, the lender does not establish an escrow account for certain recurring property charge payments, such as taxes and insurance. However, a set-aside account may be set up for those charges, and in some cases may be required based on a financial assessment. Not all interests on a reverse mortgage is tax-deductible, and to the extent that it is, such deduction is not available until the loan is partially or fully repaid.
Premier Reverse Mortgage (PRM) charges an origination fee, mortgage insurance premium (where required by HUD), and closing costs rolled into the balance of the loan. PRM charges interest on the balance, which grows over time. When the last borrower or eligible non-borrowing spouse dies, sells the home, permanently moves out, or fails to comply with the loan terms, the loan becomes due and payable (and the property may become subject to foreclosure). When this happens, some or all of the equity in the property no longer belongs to the borrowers, who may need to sell the home or otherwise repay the loan balance.
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