I consult with senior homeowners every day who have tons of questions about the efficacy of Reverse Mortgages. Should I or shouldn’t I get a reverse mortgage? Could I lose my home? With a reverse mortgage loan the bank gets the home, not my loved ones, once I die, right? Those are excellent questions that all have answers. There are all kinds of good and bad points in every decision. When it comes to obtaining a reverse mortgage, some serious thinking and decisions should be made. In order to help you in your fact gathering quest I have included a bunch of information for you.

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The PROS of Reverse Mortgages: (also called HECM – heck-uhm)
More cash flow guaranteed by the Federal Government which continues so long as your property is your primary residence. You can learn more about the options available with a reverse mortgageĀ  here.
You’ll be able to change your plan whenever you want from the line of credit, cash out, monthly checks, or a combination (dependant upon what remains). The unused portion of the Line of credit grows larger every month at 1.25% over the current interest rates. This is a way for many senior citizens to be able to remain in their home and be able to afford to pay for care for themselves and the property.
Relocating may cause psychological hardship for a lot of elderly homeowners. Memories were made in your “home sweet home”, and close proximity to loved ones and residing in your town may be a better option.
Reverse Mortgages can satisfy your existing mortgage loan or financial debt, even though your debts are moved to your Reverse Mortgage balance. (Your house does not have to be free and clear to qualify.) There are no out of pocket expenses besides the appraisal fee and HUD counseling. Some HUD counseling agencies will waive the fee.
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.
You can only refinance into another reverse mortgage if you’re 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.
Upon the sale of your home you’ll never owe more than the home is worth.
This is what is referred to as a non-recourse loan. To put it differently, you have no personal responsibility for this loan, neither does your estate or your heirs.
There are lots of great options with this loan like the loan fees are limited and interest rates are capped.
Might be a financial tool to help beneficiaries avert some of the real estate tax.
Your beneficiaries may be able to claim the interest from your mortgage on their income taxes after your death. (Make sure to consult your tax advisor for information.)

Now, those are the pros. Easy stuff 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 Negatives of Reverse Mortgages:
They can and frequently are higher priced than a conventional loan. However, you can not really compare them as they are 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’s the complete opposite of a conventional mortgage where equity will increase as mortgage payments are paid.
Selling your house will supply a higher return on your investment than a Reverse Mortgage.
Moving out of your house in under five-years makes 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 house.
If you are not living in your primary residence for a period exceeding beyond Twelve continuous months, the Reverse Mortgage is set to become due. (Nursing facilities, assisted living, moving, etc.)
You may not be eligible for needs based programs and help such as Medicaid.

When NOT to get yourself a Reverse Mortgage:
If you happen to just need short term access to cash and equity.
{If your main intention is fixing up your house, a community loan may work much better.|If you just need to add a roof, windows or other energy efficient options. If that is the case, funds and assistance might be available. Go here for more reverse equity loan information.
Once you know you are going to be moving to an assisted living facility in the very near future.
If family and friends believe that a senior reverse mortgage is not a good option, take into consideration their suggestions and preserve a balanced view; they’ve got your best needs in mind.
If your children ask you to move in with them, this can be the perfect option to staying in your own house.
If you are using the property for agriculture.