Reverse Mortgages Pros and Cons

In this time of economic slowdown and general financial upheaval, many people are struggling to make ends meet.  And this budgeting issue is often exacerbated for seniors on fixed incomes who have no viable means of bringing in extra cash.  Because costs of living continue to climb while jobs are shed at an alarming rate, many seniors have found themselves facing a dilemma that they never thought they’d encounter: sell their home to survive, or stay in it and struggle with never ending financial demands.   This has opened the market to a whole different kind of home loan, known as a reverse mortgage.  Reverse mortgages pros and cons are many and varied, and the severity of each pro and con vary significantly by each person’s individual financial situation.

Pros

The most obvious pro of obtaining a reverse mortgage is clearly financial.  No one would even consider taking any kind of loan against their home unless they needed the cash, and a reverse mortgage is no exception.  Once the loan has been closed, the homeowner generally has the option of receiving a lump sum payment against the equity in their home or receiving monthly payments.  Depending on the person’s financial situation, each option has its own set of selling points, which are generally gone over in detail prior to closing the loan.

Additional pros that are related to reverse mortgages pros and cons include the fact that, as opposed to actually selling their homes, seniors that obtain reverse mortgages are able to collect money against the equity of their homes without being forced to relocate.

Cons

The cons, when considering reverse mortgages pros and cons, have more to do with heirs than the seniors themselves.  A home that may once have been part of an inheritance generally reverts to bank ownership unless heirs are able to repay any reverse mortgage amounts.  In addition, there are age requirements that are sometimes off-putting to some seniors.

Overall

Overall, while reverse mortgages pros and cons are varied, each situation is different.   Some seniors would not be able to make ends meet without the convenience of a reverse mortgages.  Or, at the very least they would be forced to relocate after selling their homes.  Not to mention that today’s housing market is flimsy at best, and the time it takes to sell a home could be too long to wait for the extra cash for many seniors.