A reverse mortgage may provide the financial freedom that lets you live the retirement you desire, pay off medical bills, make home improvements, or just free up some extra cash. Weighing the benefits and risks is important before any major decision, so we have highlighted the potential pros and cons of a reverse mortgage loan.

Many homeowners, ages 62 and older, with sufficient equity in their homes may be eligible for a Home Equity Conversion Mortgage (HECM), or more commonly known as a reverse mortgage.¹ Seniors often choose a HECM loan because of the many benefits that fit with their lifestyle. The funds can be received in a lump sum payment^2,, monthly payments, as a line of credit or a combination of these options, and homeowners can stay in the comfort of their own home all without making monthly mortgage payments.³

Pros of Reverse Mortgage

• You can receive the funds in a lump-sum payment², monthly payments, as a line of credit or in a combination of these options
• You can stay in the home without making monthly mortgage payments³
• Proceeds are not taxed as income or otherwise (though you must continue to pay required property taxes)⁴
• Your heirs never have to repay more than the value of your home
• Your heirs inherit any remaining equity after paying off the reverse mortgage

Cons of a Reverse Mortgage

• HECM loan balance increases over time
• Value of estate inheritance may decrease over time as proceeds are spent
• Fees can be higher than a traditional mortgage
• Initial FHA Mortgage Insurance Premium
• Annual FHA Mortgage Insurance Premium
• Loan origination fee may be higher than traditional mortgages
• Although Social Security and Medicare eligibility are not affected by a reverse mortgage loan, needs-based government programs such as Medicaid can be affected.

To review your personalized loan options and decide if a HECM is right for you, call or click to speak with a Bates Reverse Mortgage Advisor.