The Pros and Cons of Reverse Mortgages

If you are a homeowner who is 62 years of age and older, and you need additional income for your retirement years, a reverse mortgage is a popular option. These are relatively easy to obtain since they do not depend upon credit scores or income as a part of their qualification process.

But before considering this option for yourself, or for some other family member, you really must consider all of the pros and cons before you make your final decision.

Pros to Consider

If you get a reverse mortgage, you will be able to do the following:

Take this money in order to supplement your social security, help with medical expenses that are unexpected, or even pay for improvement to your existing home. 
You have the ability to determine whether you would rather have your payment as a lump sum, as a line of credit, or even as monthly payments. 
There are no loan payments (monthly or otherwise) unless you pass away, decide to relocate or decide to sell your present home. In these circumstances, the full loan amount (including interest and fees) is due immediately.

Cons to Consider

Unfortunately, there are several disadvantages that you must consider when taking out one of these loans:

Origination fees are almost double what you would usually pay on a conventional mortgage.  
The wide array of sources for a reverse mortgage leads to many different varieties of this product. This can make for a confusing time when trying to compare the pros and cons from the various vendors. You may want to consider attending an approved HUD counselor workshop or information meeting before you definitely decide on a reverse mortgage.  
You must really understand how these payments will affect your eligibility for Medicaid as well as any other state or federal programs that you may be getting assistance from. It is important that if you are currently receiving any "need based" benefits, such as Medicaid or Supplemental Social Security Income (SSI), that you structure your payments so that they are spent in the same month that they are received. If you do not, you may be considered ineligible for public benefits, because these payments will be considered as income. It is important that you talk with your benefits provider in order to understand how this money may impact your eligibility benefits. 

According to HUD, there is a reverse mortgage program called The Home Equity Conversion Mortgage (HECM) that is run by FHA which is considered a safe plan. If you think that this type of program can provide you with a great financial benefit on your home, your grandparents or parents homes, you may want to investigate these programs closer.

The National Council on Aging also provides free information about these unique mortgages by calling them at (800) 510-0301. 



Wendell Carr has been involved with internet marketing for over 10 years in the real estate and online business industries. He has received national awards for his marketing ideas and is known for his "outside the box" approach to marketing. 

For more information, please visit: Reverse Mortgage Leads
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