I speak with senior homeowners daily that have tons of questions regarding the efficacy of Reverse Mortgages. ”Is this the most suitable option for me and my spouse?” Can the federal government take my house? Whose home is it truly after I get a reverse mortgage? Those are wonderful questions that all have answers. Other areas of life have advantages and disadvantages. When it comes to getting a reverse mortgage, some critical thinking and decisions will need to be made. Obviously you need to educate yourself about the options you have along with the pros and cons of a reverse.

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Benefits of Reverse Mortgages: (also called HECM – heck-uhm)
Increase your monthly cash flow for as long as you live in the home. You can learn more about reverse mortgage optionsĀ  here.
As long as there is equity in the house, depending on your initial qualifications and growth, you could make changes to the way you access the homes equity. One of the awesome features concerning the line of credit it that the unused portion of the credit line grows at the current rate plus 1.25%. An outstanding choice for those that wish to remain in there home.
Relocating may cause emotional problems for many elderly home owners. Memories were created inside your “home sweet home”, and close proximity to loved ones and residing in your area could be a more sensible choice.
Reverse Mortgages can satisfy your current mortgage loan or financial obligations, even though your financial obligations are moved to your Reverse Mortgage balance. (Your house does not have to be free and clear to qualify.) There are no out of pocket costs other than the appraisal fee and HUD counseling. Some HUD counseling organizations may waive the fee.
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.
It is possible to refinance your Reverse Mortgage over and over again provided that there is remaining equity in your home.
Neither you, your estate or your heirs can ever owe any more than the value of the home.
This is what is 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 rates, a limitation on fees, HUD counseling, asset protection (non-recourse loan), no maturity date (cannot become due during a borrower’s lifetime).
Heirs can get a tax break after the house is sold and the interest is all paid at once.
Your heirs may be able to claim the interest from your mortgage on their own income taxes after your death. (Make sure to speak to your income tax advisor for information.)

Now, those are the pros. Easy stuff right? Of course the loan officer starts off with the good stuff. Here are the cons:

The Negatives of Reverse Mortgages:
They can and frequently are higher in price than a traditional mortgage loan. However, you can’t really compare them as they are very different loan products.
If 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 is the complete opposite of a typical mortgage where equity will increase as mortgage payments are made.
You’ll typically net more money from the sale of your house than you will with a reverse mortgage.
These loans really do not seem sensible if you are planning on moving in the future.
If you’re unable to pay your real estate taxes or homeowner’s insurance or fail to maintain your home, the bank might call for repayment of the debt. (Lenders, however, will probably work with you to cure the default.)
The mortgage company can also begin the foreclosure process if you haven’t resided in the home for Twelve straight months.
Medicaid might be affected, and you may not be eligible for benefits unless of course you spend down your Reverse Mortgage proceeds monthly. (Check with your attorney and Medicaid for info.)

When NOT to obtain a Reverse Mortgage:
For those who only need short term access to cash and equity.
{When your primary intention is improving your home, a community grant may work much better.|For those who only 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.
If you know you are likely to be moving to an assisted living facility in the very near future.
If family members believe that a senior reverse mortgage isn’t really a great option, take into consideration their suggestions and maintain a balanced view; they’ve got your best interests in mind.
If you have other options such as moving in with relatives and buddies or the ability to spend money on senior living facilities.
A property owner whose residence makes use of at least 25% of the total liveable space for their company will not qualify for an FHA Reverse Mortgage.