Pros of Reverse Mortgages
- Better manage expenses
- Don’t have to move
- Pay no taxes on the income from equity
- If the Reverse Mortgage loan balance exceeds the value, you are protected
- Can be used as an asset preservation strategy
- Heirs have options when you pass or leave the property
- Can be used as a delaying strategy for social security benefits until Full Retirement Age (FRA) is reached
- Can be used for a Reverse Mortgage purchase
Cons of Reverse Mortgages
- You have to pay expenses associated with obtaining a Reverse Mortgage loan
- Interest on the loan isn’t deductible until the Reverse Mortgage is paid in full
- Potential to violate other programs having asset restrictions
- Your home can be foreclosed on if you fail to keep up on property taxes, homeowners insurance, or HOA fees
- Changes with your status can create challenges with some aspects of your Reverse Mortgage: getting married, moving to a senior care community, etc.
