The Pros and Cons of Reverse Mortgages
Pros and Cons of HECM Reverse – A Balanced Review
The pros and cons of reverse mortgages are valuable to be aware of when considering this unique home loan. As a local Florida reverse mortgage loan provider we obviously advocate for the use of HECM reverse products, but only when it is in a borrower’s best interest. Like all loan products, reverse mortgages have their pros and cons too. We’ll review the positives as well as the negatives that accompany reverse mortgage loans.
Remember that the terms like pros and cons, positives and negatives, advantages and disadvantages are all subjective and open to interpretation. So, where one borrower may accept loan terms as being reasonable, others might not.
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Important Disclosure
- The borrower remains responsible for property taxes, hazard insurance and home maintenance, and failure to pay these amounts may result in the loss of the home; and
- Charges will be assessed with the loan, including an origination fee, closing costs, mortgage insurance premiums and servicing fees.
- The loan balance grows over time and interest is charged on the outstanding balance
- At the conclusion of a reverse mortgage, the borrower must repay the loan and may have to sell the home or repay the loan from other proceeds
- Interest on a reverse mortgage is not tax-deductible until the borrower makes partial or full re-payment.
Pros of Reverse Mortgages:
- Access to Home Equity – An alternative to HELOC loans.
- Tax-Free Income – Funds received are not subject to income taxes.
- No Monthly Principal and Interest Payments – Property taxes, insurance, HOA and maintain fees must be maintained.
- Flexible Funds Disbursement – With several options to choose from.
Cons of Reverse Mortgages:
- High Fees – Upfront fees can include origination fees, mortgage insurance premiums, and closing costs.
- Interest Accrues – Interest on a reverse mortgage loans accrue over time and is added to the loan balance.
- Reduction of Equity – Over time the balance grows reducing the amount of equity available potentially limiting the option for selling or refinancing in the future.
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What Are The Costs & Fees?
Loan Application Steps
Advantages of Aging In Place
What Are The Qualifications?
Reverse Pros and Cons Recap
We hope that the list of reverse pros and cons we provided gave you a better perspective about the varying points of view related to this unique loan product. Our main goal is to ensure you have the information you need to make an educated decision about reverse mortgage loans and access to us as a trustworthy local Florida lender.
Reverse mortgages can be a great option for qualified Florida homeowners looking to augment their retirement income or have additional financial resources that allow them to maintain or improve the freedom and lifestyle they’ve earned over years of hard work and sacrifice.
If you would like to have a free, no obligation discussion about the details of the reverse mortgage loan products available, do not hesitate to give us a call, we’d love to meet with you at your home or have a talk on the phone to help you learn everything you need to know about the HECM reverse mortgage loan.
For more information give us a call at (800) 516-7155
Or use our reverse mortgage calculator to get an estimate of the proceeds you may qualify for!
Mortgage and Insurance Solutions Inc. NMLS #1124365