A List Of Reverse Mortgages Pros And Cons

Reverse Mortgages Pros and Cons

Many people out there who are aging or considering retiring have probably given consideration to applying for a reverse mortgage. A reverse mortgage, if you do not know, is when a senior gets their equity released from their home. The money can either come all at once or over several payments. In return for this, when they die or move into a nursing home, the house becomes the property becomes owned by the company providing the reverse mortgage as repayment for the loan. Due to the economy, this has become an increasingly popular option for those who are aging. As with anything, there are concerns. Below is a list of some reverse mortgages pros and cons that may help you.

Pros:

- Elderly homeowners are able to stay in their home for as long as they want.

- The reverse mortgage pays off your existing mortgage, so you will not have to make payments.

- It is not difficult to be approved for it because one’s income and credit is not looked at during the reverse mortgage application process.

- The interest rate is typically much lower than normal loans and mortgages.

Cons:

- The fee for the reverse mortgage is higher than a regular mortgage because it includes insurance costs and fees.

- If you get government assistance, the amount you get may be affected depending on the amount of money that is withdrawn every month.

- The program is complicated and most people have a very hard time understanding how it works and will affect them.

If you look at the list of pros and cons, it appears that the pros far outweigh the cons. No matter your age and situation, if you are considering this option in order to boost your income then you should talk to a financial expert about the various reverse mortgages pros and cons. The greatest pro seems to be the fact that your existing mortgage is paid off and you no longer have to make payments every month on it. The greatest con seems to be the fact that it is a complicated system that is hard to understand. The bottom line is that consulting with your family and friends should be the first step. See if any of them have done a reverse mortgage, so you can get their wisdom, and talk to an expert about the whole process. This list of reverse mortgages pros and cons should provide a good roadmap for you in terms of where to go and what to ask.

More by this Author

  • Vodka Rating List and Reviews
    12

    After four years in college, I have had my fair share of trying different types of alcohol. Actually, I was in a fraternity, so I have really had my fair share of alcohol. My favorite type of liquor and the one that...

  • Themes from Democracy in America
    2

    Alexis de Tocqueville’s political masterpiece, “Democracy in America”, touches on several core themes that define the main messages of the book. The most important one of these is based on equality in...

  • "And The Band Played On" Review
    1

    “And the Band Played On” was an extraordinarily powerful movie giving a detailed account of the outbreak of the AIDS epidemic in the United States through the eyes of many different individuals. Several...


Comments 2 comments

Tobkin 7 years ago

I just want to clarify a misstatement in what is otherwise a fairly decent post: When the borrower leaves the home, ownership is not relinquished to the lender. All that happens is that the balance of the loan becomes due. The homeowner (or homeowner's estate) can repay this balance however they wish and most commonly do so by selling the home - not to the lender, but to a private party in a perfectly normal purchase transaction. If, however, the homeowner has funds available to repay the loan without having to sell it, they can do so and still retain ownership of the home.


ReverseSecure profile image

ReverseSecure 7 years ago from Mesa Arizona

Good information.

    Sign in or sign up and post using a HubPages Network account.

    0 of 8192 characters used
    Post Comment

    No HTML is allowed in comments, but URLs will be hyperlinked. Comments are not for promoting your articles or other sites.


    Click to Rate This Article
    working