I meet with senior homeowners that are thinking about getting a reverse mortgage. Is it a good idea to take out a reverse mortgage? Can my house get foreclosed on with a reverse mortgage? Whose property is it really after I get a reverse mortgage? Those are among the most common thoughts that I hear, Other areas of life have positives and negatives. Making a decision about a reverse mortgage is no different. Below is a variety of information about reverse mortgage that you can take into consideration.

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The PROS of Reverse Mortgages: (also called HECM – heck-uhm)
Improve your monthly cash flow for as long as you live in the home. You can learn more about reverse loansĀ  here.
You’ll be able to change your plan at any time from the line of credit, cash out, monthly checks, or a combo (dependant upon what remains). The remainder of the Line of credit increases each month at 1.25% over the current rate. This is a way for many seniors to be able to stay in their home and be able to pay for care for themselves and the property.
Relocating may cause emotional chaos for a lot of elderly homeowners. Memories were made within your “home sweet home”, and close proximity to loved ones and remaining in your area may be a better option.
You do not have to own you home free and clear to qualify for a reverse mortgage. 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 regardless of what is owed on your Reverse Mortgage. You’re never going to be forced out of your home providing your real-estate taxes and homeowner’s insurance are paid and as long as you maintain your home.
You can only refinance into an additional reverse mortgage if you’re getting a 5 to 1 ratio. To meet the requirements you will need to gain access to $5 of equity for every $1 of cost for the new loan.
Neither you, your estate or your heirs can ever owe any more than the value of the home.
This is what known as a non-recourse loan. Put simply, you have no personal responsibility for this loan, neither does your estate or your heirs.
Reverse Mortgages have several safe practices: capped interest rates, a limitation on fees, HUD counseling, asset protection (non-recourse loan), no maturity date (cannot become due within a borrower’s life time).
Could be a financial tool to help heirs avoid some of the real estate tax.
Your heirs could possibly claim the interest from your mortgage on their own income taxes after your passing away. (Make sure you speak to your tax advisor for help.)

Now, those are the pros. Easy stuff 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 Negatives of Reverse Mortgages:
They can and often are higher priced than a conventional mortgage loan. However, you can not really compare them as they are very different loan products.
A Reverse Mortgage can decrease your kid’s and grandchildren’s inheritance. Because 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 complete opposite of a conventional home loan where equity increases as mortgage payments are made.
Selling your house can give you a better return on your investment than a Reverse Mortgage.
These refinancing options really don’t seem sensible if you are planning on moving in the future.
In the event that you don’t pay your taxes or insurance the lender may foreclose on your house.
If you aren’t living in your main residence for a period surpassing Twelve continuous months, the Reverse Mortgage will become due. (Nursing homes, assisted living, moving, etc.)
You may not be entitled to needs based programs and assistance such as Medicaid.

When NOT to obtain a Reverse Mortgage:
For those who just need short term access to cash and equity.
{When your main intention is fixing up your home, a community gift may work far better.|For those who simply need to add a roof, windows or other energy efficient options. If that is the case, subsidies and assistance might possibly 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 and friends believe that a senior reverse mortgage isn’t really a wise decision, take into consideration their recommendations and preserve a balanced view; they may have your best needs at heart.
For those who have other options such as moving in with relatives and buddies or the capability to spend money on senior living facilities.
If you use the home or property for farming.