If you are thinking about getting a reverse mortgage, you more than like likely have a ton of questions. “Is this a good idea for my situation?” Is It Possible To lose my home? Who is on title to the property when you invest in a reverse mortgage? Those are all very serious and very good questions. Other parts of life have pros and cons. Reverse Mortgages aren’t any different. Obviously you need to inform yourself about the options you have as well as the pros and cons of a reverse.

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The PROS 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 reverse mortgage equity loansĀ  here.
Provided that there is equity in the home, based on your initial qualifications and growth, you can make changes to the way you access the homes equity. Among the list of fantastic features concerning the line of credit it that the unused part of credit line grows at the current rate plus 1.25%. This is a way for many senior citizens to be able to stay in their home and be able to afford to pay for care for themselves and the property.
Relocating might cause psychological hardship for a lot of older home owners. Memories were created in your “home sweet home”, and close proximity to loved ones and residing in your community may be a good choice.
Get rid of your monthly mortgage payment and pay off those stubborn credit cards and other debt. Commonly, the only out of pocket expenses you will have are the HUD counseling fee and the appraisal. But additional fees may apply based on the situation and type of property.
You can live in your home no matter what is owed on your Reverse Mortgage. You’re never going to be forced out of 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 only refinance into another reverse mortgage if you’re getting a 5 to 1 ratio. To qualify you need to get 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. In other words, 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 during a borrower’s lifetime).
Can be a financial tool to help beneficiaries avoid 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 to speak to your income tax advisor for help.)

Those were the pros, the good things. Pretty easy, 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 Disadvantages of Reverse Mortgages:
They can and quite often are more expensive than a traditional mortgage loan. However, you should not really compare them as they are very different loan products.
You may not leave much if anything for your heirs with a reverse mortgage. 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 is the opposite of a standard mortgage where equity increases as mortgage payments are paid.
Selling your property will give you a better bang for your buck than a Reverse Mortgage.
These financing options really don’t make sense 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.
If you are not living in your primary residence for a period exceeding 12 continuous months, the Reverse Mortgage will become due. (Assisted living facilities, assisted living, moving, etc.)
Medicaid might be affected, and you may not qualify for benefits until you spend down your Reverse Mortgage proceeds monthly. (Check with your attorney and Medicaid for info.)

When NOT to get yourself a Reverse Mortgage:
If you happen to just need short term access to cash and equity.
{When your primary goal is fixing up your home, a community grant may work far better.|If you only need to add a roof, windows or other energy efficient options. If that is the case, grants and assistance might be available. Go here for more reverse mortgage information.
If you are ill and assisted living or a elderly care facility is coming up, don’t choose a Reverse Mortgage.
If your family says you ought not get a reverse mortgage, listen to them and have a meaningful discussion with them and the loan officer, together.
If your children invite you to move in with them, this can be the perfect alternative to staying in your own house.
A property owner whose residence utilizes more than 25% of the overall living space for their company won’t qualify for an FHA Reverse Mortgage.