866 751.6105 Reverse Mortgage Loans

Pros & Cons

 

Pros of Reverse Mortgage Loans

  • You can receive the funds in a lump-sum, monthly, a line of credit or a combination of these options
  • Homeowner can stay in the home without making monthly mortgage payments
  • Eliminates existing mortgage payments
  • Heirs are not personally liable if payoff balance exceeds home value
  • Heirs inherit any remaining equity after paying off the reverse mortgage
  • Proceeds are tax-free; however, please consult with your financial advisor

Cons of Reverse Mortgage Loans

  • Loan balance increases over time
  • Value of estate inheritance may decrease over time as proceeds are spent
  • Fees can be higher than a traditional mortgage
  • Initial FHA Mortgage Insurance Premium (2% for HECM Standard product)
  • Annual FHA mortgage insurance (1.25% of reverse mortgage balance)
  • Loan origination fee may be higher than traditional mortgages
  • Although Social Security and Medicare eligibility are not affected by a reverse mortgage loan, needs-based government programs such as Medicaid can be affected if the amount of funds withdrawn from a reverse mortgage loan exceed the monthly income limits