I speak with senior homeowners every day that have tons of questions regarding the efficacy of Reverse Mortgages. Is it a good idea to sign up for a reverse mortgage? Could the government take my house? With a reverse mortgage the lender gets the home, not my family, when I pass away, right? Those are all excellent questions and supply a place to begin to learn more about this loan. Other areas of life have pros and cons. Reverse Mortgages are no different. So here are a few things that will help you if you want info on Reverse Mortgages:

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Benefits of Reverse Mortgages: (also called HECM – heck-uhm)
Extra cash flow guaranteed through the Government which continues so long as your home is your primary residence. You can learn more about your options with a reverse mortgageĀ  here.
You’re not tied to the decision you initially make. You could make changes to the way you will get funds from your home at any time, assuming equity remains. One of several really cool features in regards to the line of credit it that the unused part of credit line grows at the current rate plus 1.25%. An excellent option for those that wish to stay in there home.
Moving can result in emotional problems for many elderly home owners. Memories were created within your “home sweet home”, and close proximity to loved ones and residing in your community could be a better choice.
Reverse Mortgages can satisfy your current mortgage or financial debt, though your financial obligations are transferred to your Reverse Mortgage balance. (Your home doesn’t have to be free and clear to qualify.) There are no out of pocket expenses other than the appraisal fee and HUD counseling. Some HUD counseling agencies may waive the charge.
You can not be evicted from your home as long as you are abiding by the agreement in the contract. Mainly these agreements include maintaining your home and paying your taxes, insurance and HOA dues.
You can refinance your Reverse Mortgage over and over again so long as there is remaining equity in your home.
You can never owe any more than the property is valued at.
This is what known as a non-recourse loan. To put it differently, you have no personal responsibility for this loan, neither does your estate or your heirs.
There are numerous great features with this loan such as the fees being limited and interest rates are capped.
Heirs could get a tax break once the house is sold and the interest is all paid at once.
Your heirs might be able to claim the interest from your mortgage on their income taxes after your passing. (Be sure to consult your tax advisor for recommendations.)

Those were the pros, the good things. Pretty easy, right? Now, I am sure you think that this is where I am going to stop. Fortunately for you I am going to share some of the bad things about reverse mortgages. Here are the cons:

The CONS of Reverse Mortgages:
They can and often are more expensive than a traditional loan. However, you should not really compare them as they are different loan products.
You may not leave much if anything for your heirs with a reverse mortgage. A Reverse Mortgage is a rising debt loan since you’re not making mortgage payments. It’s the opposite of a conventional mortgage where equity will increase as mortgage payments are paid.
You’ll typically net more cash from the sale of your house than you will with a reverse mortgage.
Moving out of your home in under five years tends to make a Reverse Mortgage imprudent. It doesn’t make good sense to use a Reverse Mortgage short term.
If you’re unable to pay your real estate taxes or homeowner’s insurance or can’t maintain your home, the lender might require repayment of the debt. (Financial institutions, however, will certainly work with you to cure the default.)
The mortgage company can also begin the foreclosure process if you haven’t lived in the home for 12 straight months.
You might not be eligible for needs based programs and assistance such as Medicaid.

When NOT to get a Reverse Mortgage:
If you only need short term access to cash and equity.
{When your main goal is fixing up your home, a community grant may work far better.|If you just need to add a roof, windows or other energy efficient options. If that is the case, grants and assistance might be available. Go here for more reverse mortgage information.
In case you are ill and assisted living or a an elderly care facility is approaching, you should not choose a Reverse Mortgage.
In the event your family says you should not get a reverse mortgage, listen to them and have a meaningful discussion with them and the loan officer, together.
If your children ask you to move in with them, this can be an excellent alternative to residing in your own home.
If you are using the home for agriculture.