The Pros and Cons of Reverse Mortgage Equity

Using reverse mortgage equity has become more and more popular among senior citizens. The popular loan program gives those over the age of 62 the ability to create a stable income. While the reverse mortgage loan is popular, it is not without its fair share of drawbacks as well. Here are a few pros and cons with reverse mortgages.

Pros

Monthly income- You will receive a monthly payment from the bank which can help you set up a regular income to help living expenses.

No payments- Regardless of what happens, you never have to make any monthly payments.

Never upside down- You will never become upside down on the loan because you can not owe more than the value of the house.

Cons

Losing equity- The bank is essentially paying you for your equity. Therefore all of the benefits of owning the house free and clear will be gone.

Sell or refinance- After the loan term is over, you do not have pay the loan back until you sell, refinance, or die. Therefore, when you sell the house, you will not get to keep the money from the sale. It will all go to the bank to repay the loan balance. 

Reduces inheritance- If you always wanted to leave your estate to your heirs, this will eliminate the house unless you pay off the loan with your own funds instead of selling the house.  

 

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