Pros
- The homeowner can stay in the home permanently
- It pays off existing mortgages on the home
- Simple to qualify
- No monthly payments are due as long as you live in the home
- The homeowner receives payments on flexible terms
- A reverse mortgage can not get “upside down” so the heirs will never owe more than the home is worth
- Heirs inhereit the home and keep the remaining equity after the balance is paid off
- Proceeds are not taxable
- The interest rate is lower than traditional mortgages and home equity loans
Cons
- The fees are the same as a traditional FHA mortgage but are higher than a conventional mortgage because of insurance costs
- Medicaid and other need-based government assistance can be affected if too much funds are withdrawn and not spent within a months timeframe
- The program is not well understood by most