Reverse Mortgage Pros And Cons

Reverse mortgages have become very popular these days. They are an excellent way to provide additional income for you at retirement. As popular as these mortgages have become, you need to analyze the reverse mortgage pros and cons before you fully commit yourself to this type of financial vehicle. As with anything financial related, there are always risks and rewards that need to be considered.

Reverse Mortgage Pros and Cons


A very positive aspect of reverse mortgage loans is that they will provide you a continuous stream of tax-free income on a monthly basis for the rest of your life.
– You will be allowed to remain living in your home with this mortgage.

– The reverse mortgage allows three methods of receiving your income: 1) a lump sum payment, 2) a line of credit or 3) a monthly payment. You choose which method best suits your needs.

– You do not have to qualify with a high credit score to get a reverse mortgage loan.

– The amount you owe on your loan will never exceed the value of your home. For example, if you are paid $250,000 over the life of the loan and your property is valued at $225,000, you are not responsible for the $25,000 difference. This rule applies to your heirs who inherit your property in the event of your death.
– You Social Security or Medicare benefits are not affected by reverse mortgage income.


You will have to pay closing costs and additional fees when you secure a reverse mortgage. Different lenders and banks charge different fees so it’s good to look around for the best deal you can find.

– The equity that you have built up over the years will be lost because that equity is the funding source for the reverse mortgage. Additionally, you will need to keep up with the maintenance of your home and continue to pay your property taxes.

– Reverse mortgage pros and cons counseling is required before you can get a loan.

– In rare instances a reverse mortgage may negatively affect your eligibility for Medicaid and SSI benefits. Since each state is different, you will need to ask your lender about your state’s specific rules.

Using a sheet of paper with a line drawn down the middle, list the reverse mortgage pros and cons for your particular financial situation. With a little thought and examination you can quickly come to the conclusion whether a reverse mortgage is right for you.