- Easy - You Keep Your Home
and Disadvantages of a Reverse Mortgage
many people, a reverse home mortgage is a good way to increase their income
in retirement - positively affecting their quality of life.
of a Reverse Mortgage
Key advantages and
benefits of reverse mortgages include:
advantage of reverse mortgages is that they are an extremely flexible financial
planning product with very few - if any - restrictions on how you receive
and use the money.
people, a reverse mortgage simply sounds too good to be true. But, there
really are no catches - given the right set of circumstances, a reverse
mortgage is an ideal way to increase your spending power in retirement.
a home equity loan, with a reverse home mortgage your home can not be taken
from you. If you default on a home equity loan, you could lose your home.
Mortgage Lenders have no claim on your income or other assets.
You will never owe more than your home's value at the time the loan is
repaid, even if the reverse mortgage lenders have paid you more money than
the value of the home.
The money is typically tax free, since itís a loan when the homeowner receives
the funds, as either additional fixed income or a lump sum.
How you use the funds received is not restricted - go traveling, get a
hearing aid, purchase long term care insurance, pay for your childrenís
college education - anything goes.
Payment Options: You can receive the loan money in the form of a lump sum,
annuity, credit line or some combination of the above.
There are no income qualifications
You retain home ownership and the ability to live in your home
Place to Live: You can live in your home for as long as you want
Insured: Some reverse home mortgages are federally insured - these are
known as HUD's HECM FHA insured Home Equity Conversion Mortgages (HECM)
reverse mortgages. With these, even if the reverse mortgage lenders default,
you'll still receive your payments.
Loan Amount: For Seniors with a large amount of home equity, private reverse
mortgage lenders offer products with no maximum loan amounts.
of a Reverse Mortgage
are few disadvantages of Reverse Mortgages, but you will want to consider
how the following factors might apply to your situation:
if You are Eligible for Low-Income Assistance: If you are currently or
will be eligible to receive low-income assistance from the Federal or State
government (like Medicaid), you will want to be careful that income from
a reverse mortgage does not disqualify you from that assistance. (NOTE:
Social Security and Medicare are not impacted by a Reverse Mortgage.)
if You Are Planning to Move in the Near Term: Since a reverse home mortgage
loan is due if your home is no longer your primary residence and the up
front closing costs are typically higher than other loans, it is not a
good tool for those than plan to move soon to another residence.
Will Not Be Left to Heirs: Many people dismiss a reverse mortgage as a
retirement option because they want to be sure their home goes to their
heirs. And it is true, a Reverse Mortgage decreases your home equity -
affecting your estate. However, you can still leave your home to your heirs
and they will have the option of keeping the home and refinancing or paying
off the mortgage or selling the home if the home is worth more than the
amount owed on it. There are numerous potential Estate and Retirement Planning
benefits to a Reverse Mortgage