Pros and Cons of Reverse Mortgage

Reverse Mortgage is interestingly becoming a favorite choice among senior citizens. They can convert the home equity into money by applying for a reverse mortgage. But, they usually look at the bright side of it. Here, are some pros and cons of reverse mortgage

Pros

1. Main advantage of the loan is that even if you outlive the loan and your equity become zero, then also you can live in your home.
2. The money you get is tax-free.
3. There are no restrictions on the use of money. You can spend it on a vacation, your daily needs, college fees of children etc.
4. Reverse Mortgages are FHA insured mortgages. Even if your lender default, then also you will get the payment.

Cons

1. If you receive medicaid, SSI or other public benefits then you cannot keep the money in account for saving as it will be counted as "liquid assets" and you may loose your eligibility for these benefits.
2. If you plan to move to new residence in few years then it is advisable not to go for it as the loan is due only on permanent residence and the closing cost are usually very high.
3. Minimum age required is 62 years.