The Pros and Cons of Reverse Mortgages

If you are age 62 or older and have built up some equity in your home, a reverse mortgage could be the right financial solution for you. Many homeowners choose reverse mortgages because they provide the financial flexibility to enhance their quality of life during their retirement years.

What Is a Reverse Mortgage?

A reverse mortgage lets you borrow against the equity in your home - you can make use of money you have already invested, without having to make monthly mortgage payments. What's more, because this program is backed by the Federal Housing Administration, you are guaranteed never to owe more than the value of your home when it is sold. And with a reverse mortgage you continue to own your home, as you do today.

The Pros and Cons of Reverse Mortgages

At American Home Bank Reverse we know you do not take your financial decisions lightly. Review our pros and cons to see if a reverse mortgage is the right option for you.

Reverse Mortgage Pros

  • Home equity is converted to monthly income, a line of credit, a lump sum, or a combination of these
  • No monthly payments to make
  • Loan repayment is not required until you no longer occupy the property as a primary residence --repayment made through the sale of the home is never more than the sales proceeds (and it may be less)
  • Simple qualifying criteria -- your income, assets and credit rating are not used for qualification
  • You retain the title to the home, and benefit from appreciation
  • Loans are insured by the Federal Housing Administration

Reverse Mortgage Cons

  • Not a good choice for short-term financing due to upfront costs
  • Interest is added to the loan balance monthly – potential for the loan balance to grow faster than the home appreciates