Advantages and Disadvantages HECM Reverse Mortgage Loan? One of the easiest ways to make sense out of a financial product is to grab a piece of paper then draw a line down the center, with one side being the advantages and the other side disadvantages. Do your research and you will quickly make sense of the program and whether or not you should be considering that option for your retirement planning.

When in doubt or when you are faced with a new challenge it is very important and beneficial to look over the pros and cons; lets dive right into the advantages and disadvantages of the HECM reverse mortgage loan.

 

What are the Advantages of a reverse mortgage? Do the advantages of a reverse mortgage actually help my situation, everyone’s is different so apply these benefits to your own case.

1. you keep ownership of the home, not the banks/lenders
2. any current or future equity belong to you
3. rates are at all time lows ( reverse mortgage rates )
4. have you heard about our reverse mortgage loan without origination fees.
5. you get to live in the home without having to pay a mortgage (for life)
6. no credit scores or income required to qualify
7. choose how you will receive your income/equity (monthly,credit line, lump sum)
8. if you need to you can change how you receive your income/equity (flexibility)
9. sell home or move at any time
10. pass equity to family/heirs/estate if there is equity left at that time
11. you will never pay back more than what home is worth (non-recourse feature)
12. income is tax free (no taxes paid on the equity)
13. no risk of foreclosure (as long as you pay for property insurance and taxes)

*** There has been an update to #3 now HUD has approved financial underwriting which allows banks/lenders to review and take your financial condition into consideration (your income and your credit scores) will impact your ability to receive the HECM reverse) depending on the bank/lender. ***

What are the Disadvantages with the reverse mortgage loan? What are some of the pitfalls and what can cause you headaches down the line with this mortgage?

• you are taking a loan, which is payable once you either die, move out, or decide to sell (if the home is not worth enough to cover the loan your heirs will not be held responsible for your debt since its a non recourse loan)
• less equity for heirs/family/estate assuming prices don’t increase in the long term
• fees involved with loan ( we can lower these fees by comparing multiple offers for you)

Our opinion maybe a little biased since we believe this is a great loan option for seniors trying to tap into the homes equity, but with our research its clear that there are more pros than cons to the HECM reverse mortgage.

FAQ About the DIsadvantages and Advantages of the HECM loan program

every senior needs to consider their own specific case – in general there are more reasons to take a reverse mortgage in 2012 than not too, but the decision is not that dry. Grown children are usually involved in their parents decision, sometimes so is their financial adviser – retirement planner. With this try to keep the actual decision based on your needs as everyone has their own opinion – but since this is your equity and your retirement ultimately the choice is your’s.

Why are there more advantages then disadvantages? The HECM program has evolved over the last 22 years, the new programs are now more geared towards the current economic environment, thus seniors should reconsider how the reverse mortgages work and also what the fees are ( no fee reverse mortgage ) now exists. Releasing equity with a reverse mortgage is a safe option with the HECM loan as the remanding equity belongs to you and not the bank. You will keep ownership of the same % of equity while your home will increase in price as we rebound fromt he recession.

Reverse Mortgage Myths

• Myth The bank will own your home.
• Myth Your children will be held responsible for paying the loan back.
• Myth Reverse mortgage lenders take advantage of seniors.
• Myth You need good income and credit scores to qualify for reverse loan.
• Myth To qualify, you must own your home free and clear.
• Myth You won’t have any equity left in your home to leave for your heirs.
• Myth Once you get a reverse mortgage, you cannot sell your home.
• Myth You will see a reduction in your Social Security income.
• Myth Reverse mortgages are only for seniors that are poor.
• Myth Closing costs are way too expensive.
• Myth The loan is due and payable when the first borrower dies.

If you need to learn more we suggest you visit our reverse mortgage information page and to find out how much you  can receive go to our free reverse mortgage calculator.

Currently there are more advantages then disadvantages – with reverse mortgage interest rates at all time low’s, no fee reverse mortgages, and with the introduction of the hecm saver program which also reduces the upfront fees.

to learn more read the following

reverse mortgages how they work
reverse mortgages pros and cons
reverse mortgages vs annuity
what is a reverse mortgage
reverse mortgage loan
reverse mortgage rates
 

ADVANTAGES AND DISADVANTAGES REVERSE MORTGAGE By Paul Galante – Add me to your circles