A reverse mortgage allows a homeowner 62 or older to use from the property’s value. This kind of agreement is definitely an attractive choice for a retired individual who has plenty of money developed in a house but does not have sufficient money to manage everyday living costs, as was the case with my cousin. I suggested she remove a reverse mortgage while in the early 1990s, before I knew much about them. I’ve since learned of the different shortcomings which exist, even though it was possibly the right decision on her.
In this article I am going to explain some of the Major Disadvantages of Reverse Mortgage, I will also explain the advantages of Reverse Mortgage
Disadvantages of Reverse Mortgage
1. The mortgage must be paid, if the last living owner/borrower dies, Before the house’s title can be used in the borrower’s reimbursed heirs
2. Payments may affect Supplemental Security Income and Medicaid payments
3. Interest is compounded on reverse mortgage and cannot be deducted from income taxes until it is repaid
4. As the equity decreases in your home with each payment to you, you may not have enough equity left for future needs or for your estate.
5. Prior to obtaining most reverse mortgages, you need to attend an approved in-person counseling sessions or consumer education classes about reverse mortgages from a nonprofit or public agency engaged in reverse mortgage education.
These are some of the Disadvantages of Reverse Mortgage, Now let us talk about the Disadvantages of Reverse Mortgage
Read: Top 5 Drawbacks / Disadvantages of Credit Cards
Some Advantages of Reverse Mortgage
1. No Monthly Installments
2. Does not affect social security
3. Income from reverse mortgage is not taxable
4. Many ways to receive the Payment
There are many other Advantages of Reverse Mortgage, But I added only 4 so that you will get idea about the reverse mortgage