What Is a Reverse Mortgage Loan? And What Are its Advantages and Dis-Advantages?

What is Reverse Mortgage?

As the word ‘reverse’ shows it is totally reverse to the regular mortgage.
Under Reverse mortgage loan, initially the borrower retains a high share in his property and receives a regular income.
Over the time, when loan amount increases, owner’s share in the property decreases.
To learn more about Reverse Mortgage, you have to look know some positive impacts and some negative impacts. Reverse Mortgage is not beneficial in some cases.

Positive Impacts of Reverse Mortgage:

Reverse mortgage loan as retirement tool:
As many people said reverse mortgage has many disadvantages but I am not totally agreed with them.
Everything is not for everyone.
What I want to said is Benefits of reverse mortgage is varies from person to person, circumstances to circumstances.
I recommend those retiree who are 62 or above with house owner to go with reverse mortgage, only if they don’t have any guardian who can support them financially.
Because in this stage of life no one is enough strong to do hard work to get money or even not mentally strong.
Many people recommend why don’t they rent out their house?
All I want to ask them is it safe to rent in this age when there is no guardian.

Negatives Impacts of Reverse Mortgage:

Society Pressure – As home is generally seems to be a sacred area. In case you speak about liquidating your primary home, no one thinks this as a good plan especially children. Children see it as giving away their own home and wealth.
Higher costs – Most of the banks charge a higher interest rate on reverse mortgage compared to regular home loan and this time the valuation of the house is also in the banks hand. This time you are not able to get real value (market Value) of your home.

So in some cases it is good idea and in some cases it is not.

All you have to do is think before go with Reverse Mortgage and to consult with a good consultant.


Location: United States

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