Reverse mortgage marketing often make reverse mortgages sound like a great thing with no downside, while there are definitely benefits to having a reverse mortgage there are also disadvantages. Understanding the reverse mortgages pros and cons is important as it affects your loved ones as well. It is important that you inform and discuss the matter of taking up a reverse mortgage with your heirs. Failing to do so may cause friction among family members sometime down the road.
Pros And Cons
On the pro side of reverse mortgages pros and cons is that your credit history, income, and savings are not taken into account when you are being considered for a reverse mortgage. These details can often jeopardize your ability to receive a loan. Instead your age, value of your home, health, and home equity are considered.
If you do not completely own your home you can still be considered for a reverse mortgage, another one of the pluses when looking at the reverse mortgages pros and cons. This is great if you are really strapped for cash and need some extra money to keep you going. However it is important to know that this pro on the reverse mortgages pros and cons list comes with a negative. The balance that you owe on your home will be added to your reverse mortgage balance.
There is a measure of flexibility when taking out a reverse mortgage that is not usually associated with loans of any kinds. One of the pros on the reverse mortgages pros and cons is that you can choose the way in which you receive the money from your reverse mortgage.
Many people choose to receive a line of credit that they can borrow from whenever the need arises. However you can also choose to receive the money in a lump sum or in monthly payments. There is even the option of combining these different payment methods to suit your needs.
One downside to reverse mortgages pros and cons is the fact that you may find yourself leaving less home equity to your heirs. This is because the majority of reverse mortgages are paid back from the proceeds of a home after an owner s death.
This can be a very delicate situation that needs careful discussion with all members of the family involved. Although reverse mortgages can be very helpful in easing financial hardship they are not for everyone. Evaluate the reverse mortgages pros and cons carefully before deciding if you are a good candidate for this loan.