Reverse Mortgage Pros and Cons To Be Aware Of

Being that it is a major decision, understanding the reverse mortgage pros and cons is crucial for you in order to make a determination as to whether or not a reverse mortgage is right for you.

And while this is not an all-encompassing list, I wanted to put together the most popular reverse mortgage pros and cons out there in order for you to gain a clear understanding as to the benefits of reverse mortgages but also reverse mortgage pitfalls that you may face as a result of obtaining a reverse mortgage.

Reverse Mortgage Pros and Cons


  • A reverse mortgage will enable you to stay in your home and live independently. You will not have to burden your children with moving in with them solely because of financial considerations. For most seniors, this is the biggest ‘pro’ when discussing reverse mortgage pros and cons
  • You can readily access this cash for any purpose…no matter what you need or want money for.
  • Certain expenses have been limited by regulation. And the expenses that are not, such as the origination fee and the monthly service fee, can vary from lender-to-lender. 


reverse mortgage pros and cons



Video Overview of Reverse Mortgage Pros and Cons

Especially in this economy, where lenders are finding it difficult to find clients they consider to be a good risk, do not be afraid to negotiate some of these fees and see if they can be reduced.

  • You will receive fair and objective advice from counselors who are not looking to financially profit from the transaction. This means they will put your needs first and potentially give you options for cheaper alternatives. 

For example, if you are applying for a reverse mortgage so that you can do home repairs, such as weatherizing your home, there may be local or state programs available that your counselor will inform you of that will be significantly less costly to you than a reverse mortgage.

  • Non-recourse provision…you can’t owe money on the loan than your home is worth.
  • Because these are loan provisions the money is tax-free
  • Easy to qualify…there are no income checks, no credit checks, no asset checks and no medical tests.


  • Some people don’t handle money well so having a large sum of cash…that you don’t have to make payments on…can be an invitation to trouble.
  • This can also cause abuse by unscrupulous family members or financial professionals. The counseling can help to steer you clear of the unscrupulous financial professionals.
  • It can be an expensive way to borrow money…so you need to go through the counseling in order to make sure that the reverse mortgage is right for you.
  • The reverse mortgage MAY be more expensive than a conventional loan…although with the reverse mortgage you will not have monthly payments. This is something that you will need to go over with your counselor during the mandatory counseling section.
  • Fraud-not on the part of the lender, but on the part of an unscrupulous insurance agent that will try and talk you into investing this money into an annuity that will be more beneficial for the sales associate than for you.
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