• Tax free income insured by the Federal Government which continues as long as your home is your primary residence. Freedom from stress and worry.
• Change your plan at any time from a line of credit, cash out, monthly checks, or a combination (depending on what remains.) The remaining Line of credit grows each month at half percent over the current interest rate.
• The HECM Line of Credit (LOC) option has many advantages for the borrower. First, the line of credit grows over time at the SAME EXACT rate as the interest rate on the loan. If you allow the line of credit to remain untouched for five or ten years, the line will be substantially larger at the end of that period at which time you can tap into some or all of the line of credit. The line of credit cannot be cancelled by the lender. You also do not have to qualify with a particular credit rating in order to get a HECM or to qualify for the line of credit. While there is a financial assessment in order to ascertain if you can pay your taxes and homeowner's insurance, there is no requirement to have a particular credit score.
• A great option for seniors wanting to remain in familiar surroundings and in the same community where they've lived for years. Moving from one's home can cause emotional turmoil and stress for many senior homeowners. Memories were made in your "home sweet home", and proximity to loved ones may seem a much better option.
• Reverse Mortgages can satisfy existing mortgages or other debt which is a plus. (Note: These debts will be transferred to your Reverse Mortgage and interest will accrue.)
• You can remain in your home as long as you wish no matter what is owed the lender. You can never be forced out of your home as long as your real estate taxes and homeowner's insurance are paid and as long as you maintain your home. And if your spouse was underage, after your passing your spouse will still be able to live in the home.
• You can refinance your Reverse Mortgage again and again as long as there is equity in your home
• If you sell the property, you can never owe more than your home is worth. Upon your passing, however, should your heirs decide to keep the home, the lender will require repayment of the full mortgage debt.
• None of your assets can be attached to repay the Reverse Mortgage debt. Additionally, the debt does not pass to your heirs or your estate. The house stands for the debt. (This is called a non-recourse loan with no deficiency judgment.)
• Reverse Mortgages have safeguards: capped interest rates, a limitation on fees, HUD counseling, asset protection (non-recourse loan), no maturity date (cannot become due during a borrower's lifetime (goes to age 150.
• Your heirs may be able to claim the interest from your Reverse Mortgage on their income taxes.
• Use proceeds for long term care or other expenses such as repairs on your home or even a vacation or new car purchase.
CONS: THINGS TO THINK ABOUT BEFORE GETTING A REVERSE MORTGAGE
* A Reverse Mortgage has all the typical closing costs of the typical FHA mortgage, but fees are higher than with a traditional mortgage. There is an up front Mortgage Insurance fee (MIP) of 2% based on appraised value which is mandated by the FHA and which cannot be eliminated. However, this is not an out of pocket expense. The appraisal fee is anywhere from $450 to $800 depending on the type of home and where you live in the United States. There are no out of pocket expenses except the appraisal fee. See closing costs below.
• A Reverse Mortgage can reduce your children's and grandchildren's inheritance. A Reverse Mortgage is a rising debt loan since no mortgage payments are being made and is the opposite of a typical mortgage where equity increases as mortgage payments are made. You can make mortgage payments on a Reverse Mortgage if you desire.
• Selling your home can provide a greater return than a Reverse Mortgage.
• Moving from your residence in less than five years makes a Reverse Mortgage impractical. It does not make good sense to use a Reverse Mortgage short term due to closing costs.
• If you fail to pay your real estate taxes or homeowner's insurance or neglect to maintain your home in decent condition, the lender may require repayment. (Reverse Mortgage lenders, however, will work with you to cure the default.) • If you leave your primary residence for a period exceeding 12 consecutive months, the Reverse Mortgage will become due. (Nursing homes, assisted living, moving, passing away, etc.)
• If your heirs wish to benefit from your home after your passing, they can sell the property and keep the remaining equity or they can get their own mortgage. However, in keeping the home, the full balance will be due.
• Medicaid may be affected, and you may not qualify for benefits unless you spend down your Reverse Mortgage proceeds each and every month. (Check with your attorney and Medicaid to discuss Medicaid's eligibility requirements.)