I meet with seniors that own a house and are seriously considering getting a reverse mortgage or at the very least, are curious about them. ”Is this the best decision for me and my spouse?” Can the federal government take my home? Whose property is it truly once I get a reverse mortgage? Those are all very serious and really good questions. Other parts of life have pluses and minuses. Reverse Mortgages are not any different. Obviously you need to inform 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 life or for a specified term. You can learn more about your options with a reverse mortgageĀ  here.
You are not bound to the decision you initially make. You can make changes to the way you receive equity from your home at any time, assuming equity remains. Among the list of awesome features about the line of credit it that the unused part of credit line grows at the current rate plus 1.25%. A good option for retirees who wish to stay in familiar surroundings and in the same neighborhood where they’ve resided for years.
Relocating can cause psychological chaos for a lot of senior home owners. Memories were created within your “home sweet home”, and close proximity to loved ones and remaining in your community can be a better choice.
Get rid of your monthly mortgage payment and pay off those stubborn credit cards and other debt. Commonly, the only out of pocket costs you will have are the HUD counseling fee and the appraisal. But additional fees may apply depending on the situation and type of property.
You’ll be able to stay in your house regardless of what is owed on your Reverse Mortgage. You’re never going to be forced out of your home provided that your real estate taxes and homeowner’s insurance are paid and as long as you maintain your home.
It is possible to refinance out of the reverse mortgage in to a traditional loan presuming you meet the requirements and there is 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 referred to as a non-recourse loan. This means that, you have no personal responsibility for this loan, neither does your estate or your heirs.
Reverse Mortgages have many safe practices: capped mortgage rates, a restriction on fees, HUD counseling, asset protection (non-recourse loan), no maturity date (cannot become due during a homeowner’s life-time).
Could be a financial tool to help beneficiaries avert a few of the real estate tax.
Your beneficiaries may be able to claim the interest from your mortgage on their income taxes after your passing away. (Make sure you speak to your income tax advisor for advice.)

Now, those are the pros. Easy stuff 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 Disadvantages of Reverse Mortgages:
A Reverse Mortgage features all the standard closing costs one finds with a normal home loan. Nevertheless, they may be more costly. There is FHA mortgage insurance and additional closing 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 standard home loan where equity will increase as mortgage payments are paid.
Selling your home will supply a better bang for your buck than a Reverse Mortgage.
Moving from your home in less than five-years tends to make a Reverse Mortgage risky. It does not make good sense to use a Reverse Mortgage short term.
If you fail to pay your real estate taxes or homeowner’s insurance or fail to maintain your home, the lender might require repayment of the debt. (Financial institutions, however, will probably work with you to cure the default.)
The lending company can also begin the foreclosure process if you have not resided in the home for Twelve consecutive months.
You might not qualify for needs based programs and assistance such as Medicaid.

When NOT to obtain a Reverse Mortgage:
An equity loan is often a less costly way of getting cash out of your home.
{If your primary intention is repairing your house, a community gift 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 be available. Go here for more reverse mortgage information.
Should you be ill and assisted living or a nursing home is imminent, you should not choose a Reverse Mortgage.
When your family says you shouldn’t get a reverse mortgage, listen to them and have a meaningful discussion with them and the loan officer, together.
For those who have other options such as moving in with friends and family or the capacity to spend money on senior living facilities.
A property owner whose home utilizes in excess of 25% of the complete livable space for their business enterprise is not going to be able to get an FHA Reverse Mortgage.