By WWLT
A reverse mortgage is one of the many tools that seniors over the age of 62 can use to cover their expenses in retirement. It works by leveraging a homeowner’s equity into cash that can be received as a lump sum, as a line of credit, or in the form of regular payments. The homeowner can use this money for any purpose they choose, like supplementing income or covering medical expenses. Any money loaned is repaid when the homeowner sells the property or passes away.
While there are some pros and cons related to obtaining a reverse mortgage, and homeowners should always carefully consider all their options before signing any type of loan agreement, it’s a fact that hundreds of thousands of Americans currently have outstanding reverse mortgage balances. If you’re a homeowner and you are considering a reverse mortgage, you may be wondering how it will affect your owner’s title insurance policy or your ability to purchase title coverage in the future. Learn more about title insurance rates in NY from World Wide Land Transfer.
If you already have owner’s title insurance in place, you can rest easy knowing that taking out a reverse mortgage will have no effect on your policy. It will still provide the same coverage for title defects as it did before. Because you still own your home when you take out a reverse mortgage, it doesn’t change anything about your ownership. You will still be protected from forgery, incorrectly filed documents, competing claims of ownership, and a range of other common title defects. Any additional endorsements you added to your policy will also continue to be in place until such time as you decide to sell your home.
As is the case with any loan, your lender will conduct a title search and will require you to pay for a lender’s title insurance policy before issuing a reverse mortgage. If they discover any title defects, they will not be able to lend you money until they are resolved.
If you’ve been following our blog, you probably already know that lender’s title insurance and owner’s title insurance are two separate policies. That means that the lender’s policy you pay for won’t cover you as the homeowner, so you might want to consider getting your own title coverage to avoid any issues during the term of your reverse mortgage.
As we mentioned, your lender will not be able to issue a reverse mortgage unless your title is clean and free of defects. If you are concerned about your ability to get a reverse mortgage in the future, you can ensure there are no defects by purchasing an owner’s title insurance policy now. Before the policy is issued, a thorough title search will be conducted, and any existing defects will be resolved. Once your title policy is in place, you can be certain there will be no title defects that could impact your ability to obtain a reverse mortgage in the future.
If you’ve already taken out a reverse mortgage and didn’t purchase owner’s title insurance beforehand, it’s still possible to obtain coverage—though it may be more complex. A title company will need to perform a title search to verify that there are no defects, liens, or encumbrances that could impact your ownership rights. In some cases, you may need to resolve outstanding issues before a policy can be issued. That’s why it’s typically easier, and often more cost-effective, to purchase owner’s title insurance at the time of your original property purchase.
Title insurance can also come into play when heirs inherit a home with a reverse mortgage attached. If the beneficiaries decide to sell the home to repay the loan, having an existing owner’s title insurance policy can protect against previously unknown title defects that could otherwise delay the sale. This added layer of protection offers peace of mind during what is often a difficult time and helps ensure that the property transfer or sale proceeds without unnecessary complications.
No matter how long you’ve owned your home—whether it’s been five years or fifty—it’s never too late to protect your investment with an owner’s title insurance policy. Many homeowners believe that title insurance is only necessary at the time of purchase, but the reality is that title issues can surface at any point in time. For example, old liens, boundary disputes, or clerical errors in previous deeds could arise when you try to access your home’s equity through a reverse mortgage. Without proper coverage, these issues can delay the process or prevent you from moving forward altogether.
If you’re considering a reverse mortgage, reaching out to a title insurance agent before you begin the process is a smart move. The team at World Wide Land Transfer can conduct a detailed title search to identify and help resolve any issues before your lender gets involved. This proactive step not only prepares you for a smoother reverse mortgage experience but also ensures you are fully protected if any hidden title problems emerge later on. World Wide Land Transfer even offers land title insurance. Investing in title insurance now means added peace of mind for you and your loved ones in the years to come.
World Wide Land Transfer is a service-oriented PA title company with offices in Philadelphia, New York, and Washington, D.C. With a record of going above and beyond, we are trusted to close everything from complex commercial transactions to residential refinance and purchase transactions.
