I meet with senior homeowners that are thinking about getting a reverse mortgage. Would it be smart to sign up for a reverse mortgage? Can my house get foreclosed on with a reverse mortgage? With a reverse mortgage loan the bank receives the home, not my family, when I die, right? Those are all very serious and very good questions. Other areas of life have pluses and minuses. Reverse Mortgages are not any different. Below is a variety of information about reverse mortgage that you should take into consideration.

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The PROS of Reverse Mortgages: (also called HECM – heck-uhm)
Increase your monthly cash flow for as long as you live in the home. You can learn more about reverse mortgage equity loansĀ  here.
You’re not bound to the decision you initially make. You could make changes to the way you obtain funds from your home at any time, assuming equity remains. One of several fantastic features concerning 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 want to stay in familiar surroundings and in the same area where they’ve lived for years.
Moving can result in psychological hardship for many older homeowners. Memories were made in your “home sweet home”, and close proximity to loved ones and residing in your community could be a good choice.
Reverse Mortgages can satisfy your existing mortgage loan or financial obligations, though your debts are transferred to your Reverse Mortgage balance. (Your house does not have to be free and clear to qualify.) Almost all of the closing costs can be lumped into the loan with the exception of the counseling fee and appraisal.
You’ll be able to stay in your house no matter what is owed on your Reverse Mortgage. You can never 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.
You are able to refinance your Reverse Mortgage over and over again as long as there is remaining equity in your home.
You can’t ever owe any more than the property is valued at.
Your financial assets cannot be attached to pay back the mortgage debt, and the debt will never pass to your heirs or your estate. The home represents the debt (non-recourse loan).
Reverse Mortgages have numerous safe practices: capped rates, a restriction on fees, HUD counseling, asset protection (non-recourse loan), no maturity date (cannot become due within a homeowner’s lifetime).
Could be a financial tool to help beneficiaries avoid some of the real estate tax.
Your beneficiaries might be able to claim the interest from your mortgage on their own income taxes after your passing. (Make sure you speak to your income tax advisor for recommendations.)

Those were the pros, the good things. Easy stuff right? Of course the loan officer starts off with the good stuff. Here are the cons:

The Disadvantages of Reverse Mortgages:
They can and quite often are higher in price than a traditional mortgage loan. However, you should not really compare them as they are very different loan products.
A Reverse Mortgage can decrease your children’s and grandchildren’s inheritance. A Reverse Mortgage really is a growing debt loan because you are not making mortgage payments. It is the opposite of a standard home loan where equity will increase as mortgage payments are paid.
You will typically net more cash from the sale of your home than you will with a reverse mortgage.
These financing options definitely don’t seem sensible if you are intending on moving in the future.
If you fail to pay your real estate taxes or homeowner’s insurance or neglect to maintain your home, the lender might call for repayment of the debt. (Lenders, however, will certainly work with you to cure the default.)
If you are not living in your main residence for a period in excess of 12 consecutive months, the Reverse Mortgage will become due. (Nursing homes, assisted living, moving, etc.)
Medicaid may be affected, and you may not be eligible for benefits unless 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 capital.
{In the event your main goal is upgrading your house, a community grant may work much better.|For those who simply need to add a roof, windows or other energy efficient options. If that is the case, funds and assistance may be available. Go here for more reverse mortgage information.
In case you are ill and assisted living or a nursing home is imminent, do not choose a Reverse Mortgage.
When family members suggest that a senior reverse mortgage is not a great option, consider their recommendations and preserve a balanced view; they’ve got your best interests in mind.
Should you have other options such as moving in with friends and relations or the capacity to spend money on senior living facilities.
A home-owner whose residence utilizes more than 25% of the total liveable space for their business enterprise won’t qualify for an FHA Reverse Mortgage.