Are you considering taking out a reverse mortgage but aren’t sure if this is the right option for you? Consider the following reverse mortgage pros and cons and determine if you would benefit.

Reverse Mortgage Pros

Reverse mortgages offer many benefits that seniors appreciate. If you take out a reverse mortgage, you can expect to reap the following benefits:

1. Access Money You’ve Invested in Your Home

The beauty of a reverse mortgage is the fact that you get access to the money you invested in your home without having to sell your home to get to it. If your home has fallen into disrepair, you can use the money from the reverse mortgage to make home repairs. The reverse mortgage may actually increase the amount of time you get to stay in your home because you’ll be able to afford to keep up with general maintenance. For an idea of how much money you could take out with a reverse mortgage, check out this reverse mortgage calculator.

2. You Probably Qualify

Reverse mortgage qualifications are pretty simple. You don’t need great credit, and you don’t have to verify income. You simply have to be at least sixty-two years of age, have sufficient equity built up in your home (or have paid your home off already), live in your home (as your primary residence), and maintain home up (don’t let your home fall  into disrepair.) Many seniors who don’t qualify for a home equity line of credit do qualify for a reverse mortgage.

3. You Won’t Have to Make Monthly Payments

You will have to pay your property taxes and insurance, but you won’t have to make payments on the money you’ve withdrawn. With a home equity loan or line of credit you have to make payments on the revolving balance each month. The money withdrawn through a reverse mortgage is not due until you move out of the home or pass away (or otherwise trigger the loan into coming due, such as by neglecting to maintain the property up to standard).

4. Your Children (or Heirs) Are Protected From Liability

Even if you use up all the money allotted through the reverse mortgage, you won’t be passing on any sort of debt to your heirs. When you pass away or move out of the home, the proceeds from selling the home will be used to pay off the loan balance. The loan (which will include interest charged) is designed such that it can never get bigger than the amount the lender can recoup from the sale of the home. You won’t have to worry that you might accidentally leave your heirs with a debt related to your mortgage.

5. Reverse Mortgages Generally Carry Low Interest Rates

Most reverse mortgages are offered at lower interest rates than competitive home equity lines of credit or home equity loans, so they are a better deal over all.

Reverse Mortgage Cons

While reverse mortgages prove to be a blessing for many seniors, there are a few downsides that you should be aware of before committing. Make sure you investigate the implications of the following before you sign on the dotted line:

1. You Will Have to Pay Fees

Your lender will charge you fees to originate a reverse mortgage. Lenders vary in how much they charge, so comparison shop and make sure you choose the lender that will give you the best deal (and has a good reputation). Ask how much the appraisal will cost, and find out if there are any hidden fees. In particular, look into how much the FHA mortgage insurance costs and how much the origination fee will cost.  If you haven’t completely paid off your mortgage, you may need to come up with the remaining balance on the mortgage before you can convert the mortgage from a traditional mortgage to a reverse mortgage. Make sure you have the funds to accommodate these costs before proceeding.

2. You Will Be Using Up Your Home Equity

While it’s great to have access to the money you’ve invested in your home, think about how much of that equity you want to spend now versus how much you want to keep for future needs or to leave to heirs. You will be presented with several options-usually in the form of a monthly payment from the lender, a line of credit you can use whenever you need an influx of cash, and a lump sum option. Calculate out how much you want to leave in the estate for future needs such as payment for assisted living costs or as an inheritance for your heirs, and then make sure the agreement you have with the bank matches your long term goals.

3. Possible Interference With Government Assistance

One last con is that reverse mortgage payments may disqualify you for particular government assistance programs if you take money out of your reverse mortgage account and then don’t use it in the specified amount of time. To make sure you don’t negatively affect how much government assistance you qualify for, check out the specifics of reverse mortgage conditions.

A reverse mortgage may be exactly what you need to help you cover the costs of medical care, prescriptions, home repairs, or daily living expenses. Just make sure you understand what you’re getting into before you take on a reverse mortgage.