MortgageReverse The ‘pros and cons’ of reverse mortgage loans

A new, consumer-facing column at the financial resource website places potential benefits and risks in equal standing

Financial resource website has published a consumer-facing guide purporting to share details about reverse mortgage loans, including potential pros and cons that consumers should consider prior to entering into one.

“There are many advantages to reverse mortgages,” the beginning of the section reads. “In the right situation, they can help support you in retirement, allow you to stay in your home longer, help you pay off your existing mortgage and even cut down on your tax bill. That’s only when these loans are used properly, though.”

Immediately, the column describes one potential advantage of a reverse mortgage as allowing access to “a tax-free way to increase cash flow,” delineating the difference between income and loan proceeds for tax purposes.

“This is different from other distributions you might take in retirement, like those from 401(k)s and traditional IRAs,” the column reads. “With these, you’ll owe income taxes on any funds received across the year.”

Later down the list of “pros” is when the columnist mentions the fact that the property tax and homeowners’ insurance burdens still rest on the borrower to keep up with in order to keep the loan in good standing.

“[Homeowners] also must take care of regular maintenance and upkeep, as this protects the lender’s investment,” the column reads. “If you don’t keep up with any of the aforementioned tasks, your lender could require full repayment immediately.”

On the list of “pros,” the column describes that a reverse mortgage could be best for someone who plans on staying in the same home; someone who has substantial equity in their property; are worried the home’s value could fall; or someone who does not plan to bequeath the home to an heir.

For the “cons,” the column says that a reverse mortgage may not be a good fit for someone who wants to bequeath the home; someone who is looking to move out of their current home; for someone who has a large balance on a pre-existing forward mortgage; and for someone who may already be facing financial hardship.

“Reverse mortgages aren’t perfect,” the column reads. “They come with significant risk, and when used improperly, a reverse mortgage could lead to losing your home to foreclosure or your heirs being left with very little when you pass on. They also come with fees and could impact your ability to earn other retirement income and benefits.”

Read the column at

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