I meet with seniors that own a home and are very seriously considering getting a reverse mortgage or at the very least, are curious about them. “Is this a good option in my situation?” Could I lose my home? “Now the lender is going to be on the title of my property, not me, right?” These are legitimate thoughts. There are all kinds of good and bad points in every decision. The same holds true with a reverse mortgage loan. Obviously you need to educate yourself about the options you have as well as the pros and cons of a reverse.

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Benefits of Reverse Mortgages: (also called HECM – heck-uhm)
Additional cash flow guaranteed through the Federal Government which continues as long as your property is your primary residence. You can learn more about reverse mortgage loansĀ  here.
Provided that there is equity in your home, depending on your initial qualifications and growth, you can make changes to the way you access the homes equity. One of several fantastic 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 baby boomers who wish to remain in familiar surroundings and in the same neighborhood where they have lived for years.
Moving can result in emotional hardship for a lot of senior homeowners. Memories were created 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 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 as long as 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.
Your assets can not be attached to pay back the mortgage debt, and the debt will not pass to your heirs or your estate. The home stands for the debt (non-recourse loan).
Reverse Mortgages have many safety measures: capped rates, a limitation on fees, HUD counseling, asset protection (non-recourse loan), no maturity date (cannot become due within a homeowner’s life time).
Might be a financial tool to help heirs avoid a few of the real estate tax.
Your heirs might be able to claim the interest from your mortgage on their own income taxes after your passing away. (Make sure to speak to your income tax advisor for advice.)

Everybody likes the good stuff or the pros. Easy stuff right? Of course the loan officer starts off with the good stuff. Here are the cons:

The Disadvantages of Reverse Mortgages:
A Reverse Mortgage includes lots of the standard settlement costs one finds with a standard mortgage. Nevertheless, they may be more costly. There’s FHA mortgage insurance and additional settlement costs, but 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. 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 standard mortgage where equity will increase as mortgage payments are made.
You will typically net more cash from the sale of your property than you’ll with a reverse mortgage.
Moving from your home in under five years makes a Reverse Mortgage imprudent. It doesn’t 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 the home, the bank might require 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 exceeding Twelve consecutive months, the Reverse Mortgage will become due. (Assisted living facilities, assisted living, moving, etc.)
Medicaid may be affected, and you may not qualify for benefits unless of course you spend down your Reverse Mortgage proceeds each month. (Check with your attorney and Medicaid for info.)

When NOT to obtain a Reverse Mortgage:
An equity loan may be a less expensive way to get cash out of the home.
{In the event your primary objective is fixing up your home, a community grant may work better.|For those who only need to add a roof, windows or other energy efficient options. If that is the case, grants and assistance may be available. Go here for more reverse mortgage information.
Should you be ill and assisted living or a elderly care facility is coming up, do not choose a Reverse Mortgage.
If family members suggest that a senior reverse mortgage isn’t really a wise decision, take into consideration their recommendations and keep an objective balance; they’ve got your best interests at heart.
If your kids invite you to move in with them, this may be a wonderful solution to remaining in your own house.
A property owner whose house uses in excess of 25% of the overall living space for their home business will not be able to get an FHA Reverse Mortgage.