I speak with senior homeowners daily who have tons of questions about the efficacy of Reverse Mortgages. Is it a good idea to sign up for a reverse mortgage? “Can I lose my home? Whose home is it truly after I get a reverse mortgage? Those are excellent questions that all have answers. There are all sorts of advantages and drawbacks in every decision. Making a decision about a reverse mortgage is no different. Below is a variety of information about reverse mortgage that you can take into account.

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The PROS of Reverse Mortgages: (also called HECM – heck-uhm)
Additional cash flow guaranteed through the Government which continues provided that your property is your primary residence. You can learn more about reverse mortgage home loansĀ  here.
You’re not bound to the decision you initially make. You can make changes to the way you receive funds from your home at any time, assuming equity remains. Line of credit increases month after month at 1.25% over the current interest rate. A good option for seniors who wish to stay in familiar surroundings and in the same community where they’ve resided for years.
Relocating may cause mental chaos for a lot of elderly homeowners. Memories were made in your “home sweet home”, and close proximity to loved ones and remaining in your town can be a good choice.
Get rid of your monthly mortgage payment and pay off those stubborn credit cards and other debt. Almost all of the closing costs can be lumped into the loan with the exception of the counseling fee and appraisal.
You can stay in your home no matter what is owed on your Reverse Mortgage. You may never be forced from your home so long as your real-estate taxes and homeowner’s insurance are paid and as long as you maintain your home.
You are able to refinance out of the reverse mortgage right into a traditional loan presuming you are eligible and there is equity in your home.
You can’t ever owe any more than the property is valued at.
This is what known as a non-recourse loan. In other words, you have no personal responsibility for this loan, neither does your estate or your heirs.
Reverse Mortgages have several safety measures: capped mortgage rates, a restriction on fees, HUD counseling, asset protection (non-recourse loan), no maturity date (cannot become due during a borrower’s lifetime).
Beneficiaries may get a tax break once the home is sold and the interest is all paid at once.
Your beneficiaries could possibly claim the interest from your mortgage on their income taxes after your passing away. (Make sure you speak to your tax advisor for information.)

Everybody likes the good stuff or the pros. Pretty easy, right? Sure, the dutiful old loan officer always gives you the good parts, but there are some things that may be drawbacks to Reverse Mortgages. Here are the cons:

The CONS of Reverse Mortgages:
A Reverse Mortgage includes lots of the standard settlement costs you find with a standard home loan. Nonetheless, they may be more expensive. There’s FHA mortgage insurance and extra settlement costs, but those expenses are normal of any FHA mortgage.
In the event that all you are leaving for an inheritance is your home, there may or may not be equity for you to leave behind. Since you do not make payments with a reverse mortgage, you loan balance grows over time. As you loan balance grows it slowly eats up your equity. It’s the opposite of a typical home loan where equity will increase as mortgage payments are made.
Selling your property can often provide a larger return on your investment than a Reverse Mortgage.
These loans really don’t make sense if you are intending on moving in the future.
If you don’t pay your real estate taxes or homeowner’s insurance or aren’t able to maintain the home, the lender might call for repayment of the debt. (Lenders, however, will certainly work with you to cure the default.)
If you are not residing in your main home for a period in excess of Twelve continuous months, the Reverse Mortgage is set to become due. (Assisted living facilities, assisted living, moving, etc.)
You may not be entitled to needs based programs and assistance such as Medicaid.

When NOT to get a Reverse Mortgage:
An equity loan may be a less expensive way of getting cash out of your home.
{If your primary objective is fixing up your home, a community loan may work better.|In the event you simply need to add a roof, windows or other energy efficient options. If that is the case, subsidies and assistance might be available. Go here for more reverse mortgage information.
Once you know you are going to be moving into an assisted living facility in the very near future.
When family members believe that a senior reverse mortgage is not a great option, give some thought to their recommendations and preserve a balanced view; they have your best needs in mind.
If you have other options such as moving in with family and friends or the capacity to spend money on senior living facilities.
A property owner whose home uses more than 25% of the overall living space for their home business isn’t going to be eligible for an FHA Reverse Mortgage.