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FAQ
What are the negative effects of a reverse mortgage?
The loss of home equity is one of reverse mortgages’ major drawbacks. You’ll make less money when you sell the property or have less borrowing power if you need a new loan because you’re not reducing the balance of your reverse mortgage. You’ll pay high upfront fees.
What are the positives and negatives of a reverse mortgage?
- Helps Secure Your Retirement. …
- You Can Stay in Your Home. …
- You’ll Pay Off Your Existing Home Loan. …
- You Won’t Have Tax Liability. …
- You’re Protected If the Balance Exceeds Your Home’s Value. …
- You Could Lose Your Home to Foreclosure. …
- Your Heirs Could Inherit Less. …
- It’s Not Free.
Is reverse mortgage a good idea for seniors?
The Takeaway. A reverse mortgage may be a smart choice if you’re an older homeowner who intends to remain in your current home to help you pay for your later years. This is especially true for seniors whose spouses can be listed as co-borrowers on the loan and are over the age of 62 as well.
Why do people dislike reverse mortgages?
Because reverse mortgages are negatively amortized loans, which means that the loan balance increases over time, some people might not like them. This differs from a traditional mortgage, which has a decreasing loan balance as borrowers make monthly payments.