It is a good idea to weigh the pros and cons of a reverse mortgage before starting your formal application. A good reverse mortgage advisor will talk to you about your individual situation, so that you get a sense of how the pros and cons of reverse mortgages affect you, specifically.
Discuss these reverse mortgage pros and cons with your family or trusted friends; you should feel as comfortable and informed as possible before proceeding with your application.
Reverse Mortgages Pros
- You have options when it comes to receiving money: fixed payment, lump sum, line of credit or some combination of these.
- Reverse mortgage income does not generally affect Social Security or Medicare benefits.
- You will never owe more than the value of the home in an HECM loan.
- There are no income requirements.
- The homeowner retains title to their home.
- After the home is sold and the loan and fees are paid to the lender, any remaining equity in the home belongs to you or your heirs.
Reverse Mortgage Cons
- Reverse mortgage proceeds could impact Medicaid eligibility.
- Borrowers must be at least 62 years old to qualify.
- As home equity is used up, fewer assets are available to leave to heirs.
- Interest is not tax-deductible until the loan is paid off.
- Borrowers are responsible for paying taxes, homeowners insurance, maintenance costs and other regular upkeep costs. If they don’t, the loan may become due.
It is worth spending some time with your mortgage adviser over the reverse mortgage pros and cons. He or she can help you determine what may actually present a problem for you, as well as how a reverse mortgage can substantially improve your quality of life.
David Chee takes pride in honesty and integrity when advising clients on the reverse mortgage pros and cons.Request a Free, Customized Quote