Reverse Mortgage Dangers and Disadvantages

1. It's difficult to move into a new property once you take a reverse mortgage.

2. You may dilute the equity in your property so that you can't pass it to your heirs.

3. If you have outstanding credit or bankruptcy issues, you may have complications from a reverse mortgage.

4. Your payments are partially a function of interest rates, which may be artificially low due to credit conditions.

5. Lump sum payments may dilute the value of your equity through high interest payments.

6. Any payments you receive rely upon a home appraisal - if the housing market is hurting, your payment may be deflated.

7. Your loan advances may be taxable if you keep them in a banking account upon receipt.

8. If you require medical care and leave your home for over 12 months, you may be liable to repay the loan.

9. You generally cannot take a reverse mortgage if you have other 3rd party liens on the home.

10. With a reverse mortgage, you lose the flexibility of renting out your home for an extended period of time.

Overall, while a reverse mortgage may be attractive for seniors who are looking to retire with more equity, you may be giving up more in flexibility than your realize. Make sure you fully evaluate all the options before deciding upon a reverse mortgage.

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Reverse Mortgage Dangers