Reverse mortgages are available to seniors who own their home.  A reverse mortgage is a loan that releases the home equity on the consumers home in one large lump sum or in multiple payouts.   Many seniors take out reverse mortgages during their years of retirement in order to gain more money, and to enjoy their golden years without financial burden.

However, for every advantage to a reverse mortgage there is a disadvantage.

First we will start with the advantages of a reverse mortgage.

#1. Overall, reverse mortgages are very flexible. There are very few limitations and restrictions on how a reverse mortgage is obtained and or used.  Compare a reverse mortgage to a home equity loan.  With a home equity loan your home can actually be taken away from you.  When you take out a reverse mortgage the lender does not have legal rights to take your home.

#2. Another great benefit to a reverse mortgage is the fact that the money you receive is in most cases 100% tax free.  With taxes on the rise this is a blessing no matter how you look at it.

#3. As stated above there is also no specific way in which you have to use the money granted from a reverse mortgage.  You are free to do with the money as you choose.  This means that you can use it to pay off bills, you can go on a trip, or you can even invest it.  The money is yours and you are free to do with it whatever you desire.

#4. There are also no income qualifications when it comes to taking out a reverse mortgage.

Like stated before, there are some disadvantages in taking out a reverse mortgage.

The old saying: it sounds too good to be true, still rings true today.

#1. Many people who look into taking out a reverse mortgage may become eligible, due to their income, for low-income assistance.  However, if you take out a reverse mortgage and then become eligible for this type of assistance, you may no longer be able to acquire it since you have taken out a reverse mortgage.

#2. If you are thinking about or are planning to move in the near future you will want to re-consider taking out a reverse mortgage.  The loan is due in full the moment you move and the home you took the mortgage out on is no longer your primary place of residence.

#3. Decrease In Equity – You may also want to consider and evaluate if you will be reducing your heirs inheritance if you were to pass before the loan is repaid.  A reverse mortgage does in fact decrease your homes equity.   If you were to pass your heirs would still be able to keep the home, however, they would have to refinance the home or pay off the mortgage in order to break free.

If you are fearful of this you may want to contact a financial attorney and discuss the matter with those you plan on leaving the home to upon your passing.

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