Advantages of a Reverse Mortgage

The main advantage of reverse mortgages is that they are an extremely flexible financial planning product with very few - if any - restrictions on how you receive and use the money.

To many people, a reverse mortgage simply sounds too good to be true. But, there really are no catches - given the right set of circumstances, a reverse mortgage is an ideal way to increase your spending power in retirement.

Key advantages and benefits of reverse mortgages include:

• No Risk of Default:

  • Unlike a home equity loan, with a reverse home mortgage your home can not be taken from you. If you default on a home equity loan, you could lose your home.

  • The Reverse Mortgage Lenders have no claim on your income or other assets.

• No Downside: You will never owe more than your home's value at the time the loan is repaid, even if the reverse mortgage lenders have paid you more money than the value of the home.

• Tax Free: The money is typically tax free, since it’s a loan when the homeowner receives the funds, as either additional fixed income or a lump sum.

• No Restrictions: How you use the funds received is not restricted - go traveling, get a hearing aid, purchase long term care insurance, pay for your children’s college education - anything goes.

• Flexible Payment Options: You can receive the loan money in the form of a lump sum, annuity, credit line or some combination of the above.

• Easy Pre-qualifications: There are no income qualifications

• Home Ownership: You retain home ownership and the ability to live in your home

• Guaranteed Place to Live: You can live in your home for as long as you want

• Federally Insured: Some reverse home mortgages are federally insured - these are known as HUD's HECM FHA insured Home Equity Conversion Mortgages (HECM) reverse mortgages. With these, even if the reverse mortgage lenders default, you'll still receive your payments.

• No Maximum Loan Amount: For Seniors with a large amount of home equity, private reverse mortgage lenders offer products with no maximum loan amounts.