Reverse mortgages can be a real boon to seniors looking for a way to tap into their home’s existing equity, but they also typically come with high fees, high interest rates and other drawbacks that may make them less than ideal for some borrowers. The primary advantage of reverse mortgages – and it’s a big one – is that seniors who’ve spent years building up the equity they have in their homes can use the reverse mortgage to draw money from their equity value without having to sell their homes. That can be a huge help to many seniors on low, fixed incomes. In essence, your home will start paying YOU.
Reverse mortgages are some of the most regulated – and complicated – loan products available, and to understand how they work and what types of loans and loan options are available, the Federal Trade Commission (FTC) has devoted a whole section of their website to help consumers understand them. If you’re considering a reverse mortgage, this article will offer a brief rundown of some of the most common advantages and disadvantages.
First, the advantages:
And, the disadvantages:
A reverse mortgage can be an attractive product for seniors who want to stay in their homes but need the equity to pay bills or increase their standard of living. But they are not without their risks and they can be difficult to understand. Take the time to learn about them and develop a list of questions you can discuss with the loan counselor. Only when you’re sure it’s a good fit for you should you sign on the dotted line.