Reverse Mortgage Pros and Cons – What You Need To Know

Are you considering a reverse mortgage to get some much needed cash from your home? If so, then you need to make sure that you are fully aware of all the reverse mortgage pros and cons. A reverse mortgage can help you get through some tough financial times, but it pays to know exactly what you will be getting when you apply for a reverse mortgage. Read on to discover the pros and cons of a reverse mortgage.

Let’s start on a positive note and look at the pros of a reverse mortgage. A reverse mortgage will provide you with a tax free source of income for the rest of your life. You can choose how you want to receive your payment. You may want a lump sum, a monthly payment or a line of credit. A reverse mortgage allows you to remain in your home.

Another great thing about a reverse mortgage is that you will not owe more than the value of your home when it comes time for repayment. You do not have to own your home fully to apply for a reverse mortgage. Your credit score and income are not used in the application for a reverse mortgage. Your age, health and home value are taken into consideration. You never have to make a monthly payment on a reverse mortgage. This payment becomes due upon your death or if you sell or move from your home. The amount of money you receive will not impact your social security or Medicare eligibility.

Getting a reverse mortgage on your home may seem like free money. But it is important that you keep reading to uncover all of the cons of a reverse mortgage. The more you know, the less likely you are to be taken advantage of.

Keep in mind that a reverse mortgage can be expensive in terms of closing costs, interest rates and other fees. A reverse mortgage will reduce the amount of equity in your home that you will leave to your heirs. Your heirs will be responsible for paying off the balance of the reverse mortgage when you die. You must keep the property taxes paid and keep the home in good repair. If you fail to do so, your reverse mortgage lender can require that the reverse mortgage balance be paid.

A reverse mortgage may impact your ability to receive Medicaid and SSI. There are caps placed on how much you can borrow on a reverse mortgage. A reverse mortgage can be more expensive that a regular home equity line of credit. You must meet with a reverse mortgage counselor before you can be approved for a reverse mortgage.

So there you have the reverse mortgage pros and cons. Read over them carefully before you make your decision. A reverse mortgage should not be taken lightly. But it can be a lifesaver if you are having financial difficulties later in life.