Thanks to the housing recession, reverse mortgages have become increasingly popular. Yet, despite their rise in popularity, getting a reverse mortgage is not necessarily right for everyone. To that end, it is important to explore the pros and cons and to learn more about the ins and outs of a reverse mortgage when trying to determine if this type of mortgage loan is right for you.
Con #1: You Might Not Qualify
Before you start exploring the rest of the pros and cons of a reverse mortgage loan, you first need to determine if you can even qualify to get one in the first place. Some requirements for obtaining a reverse mortgage include:
* You must be at least 62-years-old
* The home must serves as your principal residence
* You must own the home or have a significant amount of equity in the home
Pro #1: Put More Money Back in Your Pocket
While most reverse mortgages are conventional loans, which means they are insured by the FHA, they are different from conventional loans in that they put money back into your pocket. This is because the interest is subtracted from the current value of the home and the difference is given back to the homeowner. The amount you receive from your reverse mortgage depends upon the value of the home, your age and the current interest rates.
Con #2: There May be Added Expenses
While there are no income requirements and creditworthiness is not a concern with reverse mortgages, there are certain expenses associated with taking out this type of loan. For example, you will be expected to pay hazard insurance and you will need to pay property taxes and take other steps necessary to maintain the property. Of course, most homeowners already plan to pay for these expenses, but it is important to note that you will be required to make these investments if you take out a reverse mortgage loan.
Pro #2: Enjoy Flexibility
When it comes to receiving payments from your reverse mortgage, there are several different options available. These include receiving any of the following:
* A single, lump sum payment
* A predetermined payment each month
* A line of credit
* A combination of two of the above options
Con #3: Reducing the Inheritance
Of course, there is a trade-off for getting to use your home’s equity with a reverse mortgage. Namely, the interest and other costs associated with the loan are due after you die. Therefore, the home will likely need to be sold in order to pay off the loan, which means there may not be anything left to pass on to your heirs.
Pro #3: No Repayment Required So Long as the Home Remains Your Principal Residence
While the loan will have to be repaid after your death, the pro is that there are no payments due so long as the home remains your primary residence. As such, you can enjoy the benefits of your equity without having to worry about taking on another bill.
Keith Munsell 
