While mainstream press has recently appeared to shift more favorably toward reverse mortgage use, a Fox Business article this week takes the anti-reverse mortgage approach in spelling 10 reasons not to take out a reverse mortgage.
The article gives a basic overview of the way a reverse mortgage works, then details 10 reverse mortgage cons—some of which are not fully explained.
Those cons include fees, capped loan amounts, and the fact that the loan amount will be based upon the age of the younger spouse.
However, many of the article’s claims apply to all mortgages (not just reverse mortgages), such as having to pay property tax and insurance, having to pay mortgage insurance, and the fact that loan interest continues to accrue over time.
“Although your home may represent a significant source of equity, there are just too many pitfalls associated with a reverse mortgage,” the author writes. “If you need money out, it would be far better and cheaper to do a cash out refinance, but if that’s a problem because you don’t earn enough income to make the monthly payments, then you should sell your home, and get all the money that a sale would bring.”
Written by Elizabeth Ecker