I meet with baby boomers that own a home and are seriously considering getting a reverse mortgage or at the very least, are curious about them. Should I or shouldn’t I get a reverse mortgage? Is It Possible To lose my home? Whose home is it truly after I get a reverse mortgage? These are definitely respectable questions. With many choices in life, you have to determine what makes the most sense. The same is true with a reverse mortgage loan. So here are a few things that may help you if you are seeking facts about Reverse Mortgages:

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The PROS of Reverse Mortgages: (also called HECM – heck-uhm)
Additional cash flow guaranteed by the Federal Government which continues provided that your home is your primary residence. You can learn more about reverse mortgage optionsĀ  here.
As long as there is equity in the house, based on your initial qualifications and growth, you can make changes to the way you access the homes equity. One of the fantastic features in regards to the line of credit it that the unused portion of the credit line grows at the current rate plus 1.25%. A great option for those that wish to stay in there home.
Moving may cause emotional turmoil for many older homeowners. Memories were created inside your “home sweet home”, and close proximity to loved ones and residing in your town might be a good choice.
Reverse Mortgages can satisfy your existing mortgage loan or debts, 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 isn’t any out of pocket costs besides the appraisal fee and HUD counseling. Some HUD counseling agencies might waive the fee.
You’ll be able to stay in your home no matter what is owed on your Reverse Mortgage. You can 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 can refinance your Reverse Mortgage again and again as long as there is remaining equity in your home.
You can never owe any more than the property is valued at.
This is what referred to 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 numerous safety measures: capped interest rates, a limitation on fees, HUD counseling, asset protection (non-recourse loan), no maturity date (cannot become due during a homeowner’s life time).
Heirs can get a tax break when the property 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 death. (Make sure to consult your income tax advisor for help.)

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

The CONS of Reverse Mortgages:
A Reverse Mortgage features all of the normal settlement costs you find with a standard home loan. Nevertheless, they could be more expensive. There’s FHA mortgage insurance and extra settlement costs, however those charges 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 is the complete opposite of a typical home loan where equity will increase as mortgage payments are paid.
Selling your property can give you a greater return on your investment than a Reverse Mortgage.
These financing options definitely don’t seem sensible if you are intending on moving in the future.
In the event that you do not pay your taxes or insurance the lender may foreclose on your property.
The lender can also begin the foreclosure process if you have not resided in the home for Twelve straight months.
Medicaid might be affected, and you may not qualify for benefits unless of course you spend down your Reverse Mortgage proceeds monthly. (Check with your attorney and Medicaid for info.)

When NOT to get yourself a Reverse Mortgage:
For those who just need temporary access to cash and capital.
{If your main intention is upgrading your home, a community loan may work far better.|In the event you only need to add a roof, windows or other energy efficient options. If that is the case, funds and assistance might possibly be available. Go here for more reverse mortgage information.
If you know you’re going to be moving into an assisted living facility in the very near future.
When 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.
Should you have other options such as moving in with family and friends or the capacity to pay for senior living facilities.
If you are using the property for agriculture.