What are the Pros and Cons of HECM Reverse Mortgages?
As a local area HECM reverse mortgage loan provider we advocate for the use of HECM reverse products, but only when it is in the borrower’s best interest. Like all loans, reverse mortgages have their pros and cons too. We’ll review the positives as well as the negatives that accompany reverse mortgage loans.
If you are interested, give us a call at: (800) 779-1020 for a confidential consultation or simply use our reverse mortgage calculator to get an instant estimate of loan proceeds available if you do qualify!
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By submitting this estimate request form, I authorize HighTechLending doing business as Golden Heritage Financial to contact me to discuss the information submitted on the form in order to provide information about the HECM loan product, answer any questions you may have, help determine your qualification for the HECM reverse mortgage and if you’re interested, help you apply for the loan, even if the telephone number provided is currently listed on a corporate, state, and/or federal Do-Not-Call list(s). I understand that I am not required to give my consent as a condition of purchasing any goods or services from HighTechLending doing business as Golden Heritage Financial. I may revoke my consent at any time by contacting Samy Khoury at skhoury@hightechlending.com.
Important Disclosure
- The borrower remains responsible for property taxes, hazard insurance and home maintenance, and failure to pay these amounts may result in the loss of the home; and
- Charges will be assessed with the loan, including an origination fee, closing costs, mortgage insurance premiums and servicing fees.
- The loan balance grows over time and interest is charged on the outstanding balance
- At the conclusion of a reverse mortgage, the borrower must repay the loan and may have to sell the home or repay the loan from other proceeds
- Interest on a reverse mortgage is not tax-deductible until the borrower makes partial or full re-payment.
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HECM Reverse Mortgage List of Pros and Cons:
Remember that the terms like pros and cons, positives and negatives, advantages and disadvantages are all subjective and open to interpretation. So, where one borrower may accept loan terms as being reasonable, others might not.
Cons of Reverse Mortgages:
- High Fees – Upfront fees can include origination fees, mortgage insurance premiums, and closing costs.
- Interest Accrues – Interest on a reverse mortgage loans accrue over time and is added to the loan balance.
- Reduction of Equity – Over time the balance grows reducing the amount of equity available potentially limiting the option for selling or refinancing in the future.
- Heirs Ability To Keep The home – Your heirs will have to pay either the full loan balance or 95% of the home’s appraised value, whichever is less.
Pros of Reverse Mortgages:
- Access to Home Equity – providing an alternative to traditional HELOC loans.
- Tax-Free Income – Funds received are not subject to income taxes. (Consult your tax advisor)
- No Monthly Principal and Interest Payments – Property taxes, insurance, and HOA fees must still be paid.
- Flexible Funds Disbursement – With several options to choose from.
HECM Reverse Mortgage Loan Pros and Cons Recap
We hope that our list of reverse mortgage pros and cons provided a fair and balanced perspective about the potential downsides of this unique, senior only, loan product, as well as the features that make it an appealing financial solution. Our main goal is to ensure you have the information you need to make an educated decision about reverse mortgage loans and access to us as a trustworthy local lender.
To schedule a free, no obligation discussion about the pros and cons of reverse mortgage loans, the HECM loan qualifications, or to gain a better understanding of how they work, do not hesitate to give our help line a call at (800) 779-1020, we’d love to meet with you at your home or have a talk on the phone to share anything you need to know about the HECM reverse mortgage home loan.
5 Important Things To Understand As You Consider A HECM Reverse Mortgage Loan
1
At the conclusion of a reverse mortgage, the borrower must repay the loan and may have to sell the home or repay the loan from other proceeds.
2
Charges will be assessed with the loan, including an origination fee, closing costs, mortgage insurance premiums and servicing fees.
3
The loan balance grows over time and interest is charged on the outstanding balance.
4
The borrower remains responsible for property taxes, hazard insurance and home maintenance, and failure to pay these amounts may result in the loss of the home;
5
Interest on a reverse mortgage is not tax-deductible until the borrower makes partial or full re-payment.