Pros & and Cons of a Reverse Mortgage
If you are contemplating taking out a reverse mortgage, you need to fully educate yourself about how those loans work, and the advantages and disadvantages to the borrower.
Other People Are Reading
-
Available Cash
-
The most obvious benefit of a reverse mortgage loan is that it provides you with cash to pay bills and meet expenses, or to "enhance your retirement" (as the National Reverse Mortgage Lenders Association describes it).
Satisfaction of Loan
-
Another benefit of a reverse mortgage loan balance itself does not need to be paid off until your death, through proceeds from a life insurance policy in many cases.
-
Loss of Major Asset
-
A disadvantage of borrowing against your home is that you diminish the value of what likely is your most important asset.
Emergency Financial Resource
-
Another risk in taking out a reverse mortgage is that if you use the proceeds for day to day living, you end up lacking a financial resource for emergency purposes.
Inability to Move
-
A reverse mortgage comes due not only if the homeowner dies, but also if the homeowner moves out of or sells the property; this can inhibit the homeowner's ability to move, downsize, move into assisted living and so on.
-
References
Resources
- Photo Credit Alex de Carvalho/Everystockphoto.com
