Compare the Pros & Cons of a Reverse Mortgage for Yourself
- Opportunity to Downsize – A reverse mortgage is sometimes the best option for seniors who are downsizing. In some cases, with the appropriate advice, a reverse mortgage can also be used to buy new homes.
- Never Pay More Than Your Home Is Worth – A non-recourse clause is in every government approved reverse mortgage, so that when the home is sold or the loan is due, you will not owe more than the value of the home.
- A Way To Get Cash – A reverse mortgage is a clear method to access the equity in the home. Borrowers have several methods for receiving funds. They can receive it as a lump sum, in regular monthly payments or a combination thereof.
- Impact On Social Security And Medicare – In most circumstances, reverse mortgages do not affect Social Security or Medicare payments. However, one should always consult their accountant or tax advisor.
- Tax Free Proceeds – Reverse Mortgage proceeds are, in most cases, tax free. The final tax treatment is dependent upon a range of personal factors. However, you should always consult your accountant or tax advisor.
- What Happens To The Home – Heirs may decide to keep the home by paying off the reverse mortgage balance.
- Fees and Closing Costs – The fees charged for a reverse mortgage are typically higher than those charged for a conventional loan and it is important to compare the options and speak to your financial advisor or accountant.
- Cost Of The Loan Over Time – A number of reverse mortgages have adjustable rates which can impact the cost of the loan throughout its lifetime. Be sure to review and make sure you understand the impact and difference between a fixed or variable reverse mortgage.
- Planning On Moving Out – The goal of a reverse mortgage is to assist you in remaining in your home. That is why if you move out of your home for more than a year, the loan becomes due.
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