`Benefits and setbacks of reverse mortgages

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There are different advantages and setbacks that come with a reverse mortgage. Reverse mortgages were originally a product of the USA HUD (Department of Housing of Urban Development).These programs were introduced so as to reduce the economic and financial burden that seniors had on those who they relied on. It was basically a plan that was meant to ensure that a senior who owned a home could use the home’s equity as security for a reverse mortgage loan. This program is specifically drafted to the benefit of the seniors as no repayment is required to be made before their death. As such, it has become quite easy for home owners to be able to enjoy the retirement age and leave the responsibility of repaying back the loan to the lenders.

Advantages of a reverse mortgage


The eligibility conditions that have been put in place for a reverse mortgage are very flexible and easy to meet. This is due to the reason that in order for a senior to qualify for this loan. He/she should be at least 62 years of age and have legal ownership to a home or an estate. The best thing about this loan is that you do not require having any source of income or even a good credit score. Lenders use the homes equity in order to act as security of the loan that is given in a reverse mortgage loan.

Low or no risk at all

A reverse mortgage loan does not require to be paid back before your death except in cases whereby you end up breaching terms and conditions in the lending contract. As such, there is no risk of defaulting payment like there is in other loans. What is more unique and amazing is the fact that you can not be charged any penalties for defaulting the repayment of the loan. Due to this, it becomes quite easy for you to service the loan without having to worry about a delay in repayment.


There are different setbacks and disadvantages that are associated with a reverse mortgage. These setbacks make it quite hard for one to be able to service the loan effectively. Common setbacks in a reverse mortgage are such as:

High costs/Expensive

Reverse mortgages are actually some of the most expensive finance options in the lending. This is due to the fact that irrespective of the lack of repayment of the loan, the overall amount to be repaid back might be essentially very high. This can easily result to an economic burden to the heirs as they plan on how to repay back a reverse mortgage. In order to effectively lower the expenses and costs of a reverse mortgage always ensure that you settle for the best borrower.

Inheritance issues

Reverse mortgages  have a very great impacts  on  the  inheritance of  properties whose equities is  used  to act as security of  the loan. Therefore, there are different issues that can easily  crop up especially in the repayment  of the loan, whereby the amount of money required to settle  the outstanding loan balance.

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