Life After Closing: What Changes?
One of the most common questions borrowers often ask after closing is:
“What happens now?”
For most borrowers, the answer is reassuring: Daily life remains much the same.
You continue living in your home.
You continue owning your home.
And you begin enjoying the financial flexibility your reverse mortgage was designed to provide.
If your HECM paid off an existing traditional mortgage, you have replaced a loan that required monthly principal and interest payments with one where those payments are optional.
That may help improve monthly cash flow and create greater financial flexibility throughout retirement.
Although required monthly principal and interest mortgage payments are not required, you remain the homeowner and must continue to:
Live in the home as your primary residence
Pay property taxes
Maintain homeowners insurance
Pay homeowners association dues (if applicable)
Keep the property in reasonable maintenance level
These responsibilities are similar to those of any homeowner.
Meet Your Loan Servicer
After your reverse mortgage closes, the company that originated your loan may no longer be the company that services it.
Instead, your loan will typically be managed by a loan servicer. Within the first few weeks after closing, you will generally receive a welcome package containing important information about your loan, including:
Your loan number
Servicer contact information
Instructions for creating an online borrower account
Information about your line of credit (if applicable)
Servicing forms and helpful resources
Your loan may also be sold to an investor. If that happens, you will receive written notification.
A sale of the loan or transfer of servicing does not change the contractual terms of your reverse mortgage. Your loan balance, interest-rate provisions, available line of credit, and borrower protections remain governed by your loan documents.
Your Loan Servicer Is Your Primary Resource
Throughout the life of your HECM, your servicer manages most of the daily administrative responsibilities associated with the loan.
Your servicer can assist with:
Monthly loan statements
Line-of-credit advance requests
Scheduled monthly advances, if applicable
Updating your mailing address or contact information
Payoff requests
Property-tax and insurance questions
Annual occupancy certifications
Guidance when the loan eventually becomes due and payable
For most questions involving the ongoing administration of your reverse mortgage, your loan servicer should be your first call.
Manage Your Loan Online
Most reverse mortgage servicers offer secure online account access.
Depending on the servicer, your online account may allow you to:
View your current loan balance
Monitor your available line of credit
Request line-of-credit advances
Track pending requests
Access statements and servicing forms
Review payoff information
If your HECM includes a line of credit, you borrow only what you choose to access.
Any remaining available funds stay in the line of credit until you request them, subject to your loan terms.
Keep Your Information Current
Life circumstances can change over time.
You may change your mailing address, switch banks, establish a living trust, appoint someone under a Power of Attorney, or spend an extended period away from home.
Notify your loan servicer whenever a significant change occurs so your account information remains current and the servicer can continue communicating with you effectively.
One important annual requirement is the Occupancy Certification.
Each year, your servicer will ask you to confirm that the property continues to be your principal residence. Complete and return this form promptly to help keep your loan in good standing.
Your Ongoing Responsibilities as a Homeowner
Although your HECM does not require monthly principal and interest mortgage payments, several homeowner obligations continue throughout the life of the loan.
Continue Living in the Home
A HECM is intended for your principal residence.
Temporary travel, vacations, and seasonal living arrangements generally do not create a problem. However, the loan may become due and payable if:
You permanently move from the home
The home is no longer your principal residence
The last remaining borrower lives outside the home for more than 12 consecutive months because of a physical or mental illness
Contact your loan servicer before an extended absence if you are unsure how it could affect your loan.
Pay Property Taxes
Property taxes remain your responsibility.
If you anticipate difficulty making a tax payment, contact your servicer as soon as possible. Addressing concerns early may provide more options than waiting until the taxes become delinquent.
Maintain Homeowners Insurance
You must keep adequate homeowners insurance in force.
If your policy lapses, your servicer may obtain force-placed insurance on the property. This coverage may be more expensive and may provide more limited protection than a policy you purchase yourself.
Notify your servicer promptly if you change insurance companies or receive a cancellation or nonrenewal notice.
Maintain the Home
Borrowers are expected to keep the property in reasonable condition.
Routine maintenance may include:
Repairing roof leaks
Fixing broken windows
Addressing plumbing problems
Maintaining heating and cooling systems
Correcting health or safety concerns
Keeping the home structurally sound
Maintaining the property helps protect your investment and supports your ability to remain safely and comfortably in your home.
Pay HOA Dues
If your property belongs to a homeowners association, condominium association, or similar organization, applicable dues and assessments remain your responsibility.
Communication Is One of Your Best Protections
One of the most important things you can do throughout the life of your reverse mortgage is maintain communication with your servicer.
Reach out early if you have questions about:
Property taxes
Homeowners insurance
HOA dues
Your line of credit
Storm or property damage
An extended absence from the home
Changes to ownership or a trust
Difficulty meeting a loan obligation
Prompt communication can often prevent a manageable issue from becoming a larger problem.
Your Loan Servicer Is Your Primary Resource
Many adult children and other family members have never encountered a reverse mortgage.
A simple conversation can prevent uncertainty and make it easier for a loved one to assist you later if necessary.
Consider telling your family:
That you have a reverse mortgage
Which company services the loan
Where your loan documents are stored
Whom they should contact with questions
Your wishes concerning the home
You may also want to keep the servicer’s contact information with your estate-planning and other important financial documents.
Final Thoughts
A reverse mortgage is designed to support your financial goals throughout retirement—not simply on the day the loan closes.
By understanding your responsibilities, keeping your information current, maintaining communication with your loan servicer, and helping your family understand the loan, you can manage your HECM with greater confidence and peace of mind.
About the Author
Vinh Tran is a Reverse Mortgage Specialist at Fairway Home Mortgage. For nearly 2 decades, he has helped countless of Missouri families to buy and refinance their homes, serving as an advisor to make smarter financial decisions regarding their home equity. In the last decade, Vinh has focused his practice to help seniors to understand and make better use of their lifelong savings that have been historically ignored...home equity. For most seniors, this is their largest savings bucket.
Have questions about how a reverse mortgage can provide the extra "gold" in your Golden Years? Please reach out to schedule a 15 minute to get answers to your questions. (314) 954-8204 cell
Website: www.vinhtran.net
Vinh Tran - Fairway Home Mortgage NMLS#850594. 174 Clarkson Road Ste 135 Ellisville, MO 63011 (314) 954-8204. Fairway is not affiliated with any government agencies. These materials are not from HUD or FHA and were not approved by HUD or a government agency. Reverse mortgage borrowers are required to obtain an eligibility certificate by receiving counseling sessions with a HUD-approved agency. The youngest borrower must be at least 62 years old. Monthly reverse mortgage advances may affect eligibility for some other programs. This is not an offer to enter into an agreement. Not all customers will qualify. Information, rates and programs are subject to change without notice. All products are subject to credit and property approval. Other restrictions and limitations may apply. Equal Housing Opportunity.