Ask any economist to analyze a financial move and they will tell you that there is always a good side and a bad side. They will use terms like “opportunity cost” or “time value of money.” In essence, their point is that there is no perfect financial transaction. People have to decide what is best for them in their current condition. The same can be said for a reverse mortgage. They are not all good and they are not all bad. Each loan needs to be considered in light of the borrower’s circumstances.
Pros of the Reverse Mortgage
There are quite a few advantages of a reverse mortgage:
- No strict credit score or income requirements
- Borrower is allowed to stay in their own home
- Debt does not have to be repaid as long as borrower is alive
- Limits on loan amounts reduce the chance that the mortgage will be more than home’s value
Cons of the Reverse Mortgage
As mentioned earlier, there are some downsides to the reverse mortgage:
- The loan makes payments to the borrower, growing the outstanding mortgage balance. This can reduce inheritance for the heirs.
- Medicaid benefits could be altered if the borrower receives too much from the mortgage.
- Fees on the reverse mortgage are higher than a conventional loan, but in line with an FHA loan.
Before making any mortgage decision borrowers are urged to sit down with a loan officer and look over their options. Getting all the facts about a particular loan will help the borrower make the right choice for their needs.
Visit our reverse mortgage page for additional program information.
Contact me below or apply online to see if you qualify for a reverse mortgage!
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