Reverse Mortgages Pros and Cons

Could you use a tax free credit line from $50,000 to $500,000 and no payments? If you are age 62 or older, you may qualify for a special type of loan that is based on your home equity.

Reverse Mortgage

A reverse mortgage is a lien on the equity in a home, which is paid out to a homeowner, either in monthly installments, a lump sum, credit line or a combination of the three.

Reverse Mortgages Pros and Cons

Some of the advantages are:

No out of pocket costs
Tax free income for life
Retain ownership of your home for life
No more mortgage payments
No credit or income checks
Credit line growth

A reverse mortgage can be a useful tool for replacing lost income, paying for living expenses, paying for health care expenses, an emergency, long term care, travel or for just about anything else.

I go into great detail about reverse mortgages in Chapter 4 of my book, More Money for Retirement Right Now.

You’ll discover important information about:

The benefits
The qualifications
How a reverse mortgage works
The types of reverse mortgage programs
What you need to know
Where to get a reverse mortgage loan
How much you can borrow
The withdrawal options
Consumer protections
Planning implications

I also point out the disadvantages. For example, some of the disadvantages are:

The upfront cost
Limits on the size of the loan
Using it to pay for long term care insurance

If you have substantial equity in your home, a reverse mortgage is a tool that can help you convert some of your home equity into cash to pay for the services you may want or need while you continue to live in your home.