Reverse Mortgage Pros and Cons

By: Terry Edwards

Have you been looking at a reverse mortgage as a way of increasing your retirement income? Today, reverse mortgage loans have become a hot trend in the financial and mortgage world, but as attractive as they may first appear, there are important areas to look for. Here is a look at a few of the more important reverse mortgage pros and cons.

Reverse Mortgage Pros and Cons

Pros

One of the best parts to a reverse mortgage is the fact that it is a tax free source of money that can continue to come in month after month for as long as you live.

A reverse mortgage loan will allow you to continue living in your home.

You will also have the option in most cases of getting your loan funds in a lump sum payment, line of credit or as a monthly payment. Choose the payment option that will work out the best in your financial situation.

You can get a reverse mortgage loan regardless of your current credit situation.

Another excellent aspect of these loans is that you will never owe more than what the value of your home is. This means that if you end up receiving $200,000 over the life of your loan, but your home is only valued at $175,000, you will not have to come up with the difference. This includes your heirs as well in the even you pass away.

Finally, payments received by you with a reverse mortgage loan program do not affect any Social Security or Medicare benefits.

Cons

As with anything in life, there are some negative aspects to a reverse mortgage loan that you need to be aware of.

A reverse mortgage will have fees and closing costs with it. Every loan broker or bank will be different in the fee schedule, but they all include these costs.

You will lose the equity in your home with a reverse mortgage since that is how the loan amount is based. You will also need to maintain your home in good condition and be current on property taxes.

You will need to obtain a reverse mortgage counseling class before getting the loan.

The loan may have an effect on Medicaid and SSI benefits, although in most cases it will not. Each state is different in how they handle it.

By understanding a few of these major reverse mortgage pros and cons you will be able to make a more well informed decision on whether to move forward with this type of loan program. It's a serious decision that can have long lasting financial effects.

Mortgages
 • 
 • 
 • 
 • 
 • 
 • 
 • 
 • 
 • 
 • 
 • 
 • 
 • 
 • 
 • 
 • 
 • 
 • 
 • 
 • 

» More on Mortgages
 



Share this article :
Click to see more related articles