Reverse Mortgages Pros and Cons.

Learning about reverse mortgages can get pretty confusing. There are many details you should get acquainted with when decided if this is the option for you. I will point out some of the pros and cons of a reverse mortgages that could help you a little.

Lets start with the good news first:

Pros

  1. You will continue to live in your home as along as you want. The comfort of know that you will have a place to live as long as your alive is a huge factor for choosing reverse mortgages.

  2. There are no income requirements to obtain a reverse mortgage. The point of the mortgage is so you would have income and since most elderly people are unable to work it makes a perfect match.

  3. You will have a new source of cash flow that you can put toward living expenses. This is the number one reason seniors choose to get a reverse mortgage.

  4. You will not have to make monthly payments.

  5. You will never have to repay more that the property is worth. It does not matter how long you live or how much you borrow, your mortgage insurance is there to cover what’s left after you exhaust the equity.

Now for the bad news:

Cons

  1. Reverse Mortgages can be very expensive, even more so than conventional mortgages. This means more commission for the lenders and more reason for you to keep an eye on the fees at closing.

  2. You are still responsible for your taxes, home insurance, home repair and an added reverse mortgage insurance. HUD require you to have insurance on your new reverse mortgage, on top of your regular home insurance. It also becomes a requirement to keep you home in good shape.

  3. You could lose your medicare benefits if you suddenly acquire a large sum of money. This is a huge factor and should be taken into consideration before you apply.

  4. It is possible to live long enough to deplete all the equity in your home. This would leave with nothing to leave the younger generation of your family.

I always encourage you be do some research before you get into and financial dealings. Get yours self an expert to help you in areas you are not familiar and always read the fine print.

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Posted by J.Scott on Jan 8th, 2010 and filed under Real Estate. You can follow any responses to this entry through the RSS 2.0. You can skip to the end and leave a response. Pinging is currently not allowed.

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