Reverse Mortgage Information Pros And Cons

In order to decide if a reverse mortgage is the right choice for you, it is important to know both the pros and the cons of this financial product.

Reverse Mortgage Pros

A reverse mortgage can be an extremely helpful tool for people who wish to convert their home's equity into cash.

A Reverse Mortgage:

• Gives you the opportunity to age in place with no monthly mortgage payment.
• Requires no repayment as long as you remain in the home and remain current on the loan requirements.
• Gives you the opportunity to gain access to additional funds to cover expenses.
• Liquidates your home's equity for you to use as you choose.
• Does not require you to pay additional income tax.
• Does not require you to have a minimum income or credit rating.
• Is non-recourse, meaning you can never owe more than your home's value.
• Will NEVER have a prepayment penalty.
• Is insured by the federal government.
• Gives you the opportunity to finance any fees so there are little to no out of pocket costs.
• Allows you to choose one of 5 flexible payout options for any funds from it.

Reverse Mortgage Cons

Though none of a reverse mortgage's features are specifically negative, it is important to understand any financial product completely before making a decision.

A Reverse Mortgage:

• Could have higher up front fees than other types of financing.
• May reduce the amount of equity left to your heirs.
• Could affect your eligibility for need-based benefits like Medicaid and Supplemental Security Income
• May become due when you still live in the home if you do not remain current on the loan terms.
• Does not allow any income interest deductions on your taxes until the loan becomes due.
• Could prevent you from having equity in the future.