I consult with senior homeowners daily that have tons of questions regarding the efficacy of Reverse Mortgages. “Is this a wise course of action in my situation?” Can I lose my home? Who is on title, me, the lender, the us government or all of us? Those are all very serious and very good questions. With many choices in life, you have to decide what makes the most sense. Making a decision about a reverse mortgage is no different. In order to assist you in your fact gathering quest I have included a bunch of information for you.

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Benefits of Reverse Mortgages: (also called HECM – heck-uhm)
Improve your monthly cash flow for as long as you live in the home. You can learn more about reverse mortgage loansĀ  here.
You’re not bound to the decision you initially make. You can make modifications to the way you obtain equity from your home at any time, assuming equity remains. Among the list of 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 good option for retirees who want to live in familiar surroundings and in the same neighborhood where they have resided for years.
Moving can cause psychological hardship for many elderly homeowners. Memories were created in your “home sweet home”, and close proximity to loved ones and residing in your area could be a more sensible choice.
You do not have to own you home free and clear to qualify for a reverse mortgage. There aren’t any out of pocket expenses other than the appraisal fee and HUD counseling. Some HUD counseling companies might waive the fee.
You can live in your house no matter what is owed on your Reverse Mortgage. You can’t ever be forced from your home as long as 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 right into a traditional loan presuming you meet the requirements and there is equity in your home.
After the sale of your home you’ll never owe more than the home is worth.
Your assets can not be attached to repay the mortgage debt, additionally, the debt will not pass to your heirs or your estate. The home represents the debt (non-recourse loan).
Reverse Mortgages have numerous safe practices: capped mortgage rates, a limitation on fees, HUD counseling, asset protection (non-recourse loan), no maturity date (cannot become due within a homeowner’s life time).
Could be a financial tool to help heirs avert a few of the real estate tax.
Your heirs could possibly claim the interest from your mortgage on their own income taxes after your death. (Be sure to speak to your income tax advisor for information.)

Those were the pros, the good things. Super simple, no? 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 more expensive than a traditional loan. However, you should not really compare them as they are different loan products.
In the event that whatever you are leaving for an inheritance is your home, there may or may not be equity for you to leave behind. A Reverse Mortgage really is a growing debt loan because you are not making mortgage payments. It is the complete opposite of a conventional mortgage loan where equity increases as mortgage payments are paid.
Selling your home can give you a better return on your investment than a Reverse Mortgage.
Moving out of your residence in less than 5 years tends to make a Reverse Mortgage imprudent. It does not make good sense to use a Reverse Mortgage short term.
In the event that you don’t pay your taxes or insurance the lender may foreclose on your home.
The lender can also begin the foreclosure process if you haven’t resided in the home for 12 straight months.
You might not be eligible for needs based programs and help such as Medicaid.

When NOT to obtain a Reverse Mortgage:
If you just need temporary access to cash and capital.
{When your main intention is improving your house, a community gift may work far better.|In the event you simply 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.
Once you know you are likely to be moving to an assisted living facility in the very near future.
If 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.
If your kids ask you to move in with them, this might be an excellent solution to staying in your own home.
A property owner whose property makes use of at least 25% of the complete livable space for their company will not qualify for an FHA Reverse Mortgage.