Determine Your Eligible Reverse Mortgage Amount


Reverse Mortgage Disadvantages

Reverse mortgages have had a bad reputation in the mainstream media for quite some time. In the past, many seniors got a reverse mortgage only paying attention to the advantages, without fully understanding some of the drawbacks. Reverse mortgage lenders are starting to advertise on TV more by hiring well-known celebrities to promote the advantages of a reverse mortgage. We're here to help make sure people understand some of the disadvantages as well.

Affects on Inheritance

A reverse mortgage has to eventually be repaid; either when the borrower moves out or passes on. When the borrower passes on, the estate is responsible in repaying the mortgage. There are only two options: pay off the mortgage either through borrowed funds from another source or from the estate or the property must be sold. Anything left after the mortgage is paid off will belong to the estate. Either way, the value of the inheritance will be decreased in one form of another. Many people are fine with this because they believe it is their money that they worked for, while others simply have no other option and need the money from a reverse mortgage to cover medical expenses.

Insurance, Property Taxes, Maintenance

The borrower still maintains ownership of the property; they still must ensure the property is in good shape. Additionally, they are also responsible to pay annual homeowners insurance premiums and property taxes along with HOA fees if applicable. If the property taxes are not paid annual, the home could get foreclosed upon.

Funds to Care for Borrower

A popular reason to take out a reverse mortgage (a.k.a. HECM), is to pay for in-home care. In-home care can deplete one's account very quickly. If a borrower opts for a lump sum payment to pay for 247 in-home care and runs out of money and then later on needs to move into an assisted living community, there will be no way to cover the cost of doing so. The only option will be to move into nursing homes paid for by Medicare.

More Interest

While the fees of a reverse mortgage have dropped quite a bit with the introduction of the HECM Saver reverse mortgage, a reverse mortgage is still a negative amortization loan and the interest owed will continue to compound over time.


Even though there are quite a few big disadvantages of getting a reverse mortgage, sometimes it is still necessary. Many experts would agree that a reverse mortgage should be the last resort. Contact one of our lenders today to discuss if a reverse mortgage is right for your specific situtation.
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