Reverse Mortgages are often misunderstood, so this article is meant to clear up some of the misconceptions.  In order to qualify for a reverse mortgage applicants must be 62 years of age or older and have some equity in their home.  A reverse mortgage is a federally insured loan that seniors can you use to retire without having to make mortgage payments while still keeping their home, and having the ability to pass it on to their heirs.  The loan can be used to eliminate expenses and to increase monthly cash flow.  Below are the pros and cons of a reverse mortgage.  

NOTE: If you wish to watch a reverse mortgage informational video please visit www.ReverseMortgageConsutants.ORG for the most up to date information.

Reverse Mortgage Pros:  

1) No repayments required for the rest of your life as long as you or your spouse live in your home. Only pay property taxes and insurance.

2) Tax-Free Funds for as long as you live in the home. The funds you receive are non-taxable.

3) Often there is no specific income or credit score requirement.  However there is talk that this may change.

4) Very low risk of default: As long as you meet the terms of your loan. Your heirs will never owe more than the value of the home: If your home goes down in value the federal government steps in and covers the difference. If your home goes up in value your heirs get any additional equity after the loan is repaid.  A reverse mortgage is a non recourse loan which means lenders cannot file a deficiency judgement against the heirs.  The heirs are not personally liable for the note.

5) Eliminate Expenses: Retire without having to worry about mortgage payments or other expenses. Your funds can be used anyway you see fit.

6) You get to keep your home and can enjoy your retirement! If you haven’t saved enough for retirement a reverse mortgage can provide you with peace of mind and the additional funds you may need.

Reverse Mortgage Cons

1) You may outlive your equity funds so you will need to spend the funds wisely.

2) Fees can be more expensive than conventional loans. Reverse mortgage lenders often charge an origination fee and closing costs, which can by higher than a conventional loan. This can add up to several percentage points.  However, at the same time with a reverse mortgage no repayments are required, and with a typical mortgage you have to make payments. 

3) Value of estate inheritance may decrease over time as proceeds are spent.  This is especially the case if the value of the home goes down.

4) Needs based government programs such as Medicaid may be affected.  However, a reverse mortgage loan generally does not affect eligibilty for Social Security or Medicare.

NOTE:  To watch an informational video and to compare reverse mortgage lenders, rates, qualifying amounts while keeping your information confidential please visit: www.ReverseMortgageConsultants.ORG