I talk to senior homeowners daily that have tons of questions about the efficacy of Reverse Mortgages. Is it a good idea to take out a reverse mortgage? Can my house get foreclosed on with a reverse mortgage? With a reverse mortgage the lending company receives the home, not my loved ones, once I pass away, right? Those are all very good questions and supply a starting point to understand more about this loan. With many choices in life, you need to determine what makes the most sense. Making a decision about a reverse mortgage is no different. In order to assist you in your fact gathering journey I have included a bunch of information for you.

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The PROS of Reverse Mortgages: (also called HECM – heck-uhm)
Extra cash flow guaranteed through the Government which continues so long as your home is your primary residence. You can learn more about reverse mortgage equity loansĀ  here.
As long as there is equity in your house, based on your initial qualifications and growth, you can make changes to the way you access the homes equity. The unused portion of the Credit line grows month after month at 1.25% over the current rate. A great choice for retirees who wish to stay in familiar surroundings and in the same neighborhood where they have resided for years.
Relocating can result in mental turmoil for a lot of senior homeowners. Memories were made inside your “home sweet home”, and close proximity to loved ones and residing in your area could be a better option.
Get rid of your monthly mortgage payment and pay off those stubborn credit cards and other debt. 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 regardless of what is owed on your Reverse Mortgage. You can never be forced from your home providing 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 are getting a 5 to 1 ratio. To qualify you need to gain access to $5 of equity for every $1 of cost for the new loan.
After the sale of your home you will never owe more than the house is worth.
Your financial assets can not be attached to repay the mortgage debt, and the debt will never pass to your heirs or your estate. The house represents the debt (non-recourse loan).
Reverse Mortgages have many safety measures: capped interest levels, a restriction on fees, HUD counseling, asset protection (non-recourse loan), no maturation date (cannot become due during a borrower’s life-time).
Could be a financial tool to help heirs avoid some of the real estate tax.
Your heirs could possibly claim the interest from your mortgage on their income taxes after your passing away. (Make sure you speak to your income tax advisor for help.)

Now, those are the pros. Pretty easy, right? Of course the loan officer starts off with the good stuff. Here are the cons:

The CONS of Reverse Mortgages:
They can and quite often are higher priced than a conventional loan. However, you should not really compare them as they are very different loan products.
If 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’s the complete opposite of a conventional mortgage where equity will increase as mortgage payments are made.
You will typically net more cash from the sale of your home than you will with a reverse mortgage.
Moving out of your residence in under five-years makes a Reverse Mortgage imprudent. It does not make good sense to use a Reverse Mortgage short term.
If you don’t pay your taxes or insurance the lender may foreclose on your property.
The lending company can also begin the foreclosure process if you have not resided in the home for Twelve consecutive months.
Medicaid could be affected, and you may not be eligible for benefits unless you spend down your Reverse Mortgage proceeds monthly. (Seek advice from your attorney and Medicaid for info.)

When NOT to obtain a Reverse Mortgage:
An equity loan are often cheaper way of getting cash out of your home.
{In the event your major intention is repairing your house, a community gift may work better.|In the event you 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 loan information.
In case you are ill and assisted living or a nursing home is coming up, don’t choose a Reverse Mortgage.
If family members believe that a senior reverse mortgage isn’t really a great option, consider their suggestions and maintain a balanced view; they’ve got your best needs in mind.
If your kids invite you to move in with them, this can be the optimal option to residing in your own home.
If you use the home for farming.