Categorized | Real Estate

Disadvantage of Reverse Mortgage

In most cases, it can seem like there is not a single disadvantage of reverse mortgage. However, like any other product, this product does actually have one or two drawbacks. Essentially, whether or not this product is a good idea depends upon the ultimate objectives of the homeowner. If the homeowner gets one of these, they will not be able to leave their home to their children when they die. However, if the option is having no cash for their retirement or leaving their home to their children, a reverse mortgage seems like the better option. After they die, the home is sold. The bank uses the proceeds to rectify the outstanding loan. Then, the remainder is passed to the heirs. The other disadvantage is evident when this idea is compared to moving to a condo or a retirement community. In both condos and retirement communities, the senior citizen does not have to worry about yard maintenance or roofing issues. However, they do have to keep up with these tasks if they get one of these mortgages on their current home. In some cases, if the homeowner owns a condo, they can get a reverse mortgage on it. Thus, it is possible to have the best of both worlds. The disadvantages of this product are not very numerous. Thus, most people choose to get them because they are so convenient. For the senior citizen who wants to keep their home while also cashing into its equity, this can be a great idea.