Potential Drawbacks of Reverse Mortgages

Discover the key disadvantages of reverse mortgages, including age restrictions, repayment conditions, high interest rates, and impacts on estate inheritance. Understand what to consider before choosing this financial product.

A reverse mortgage functions as a loan secured against your home equity, designed for homeowners aged 62 and older. It allows you to access funds as a lump sum or line of credit without monthly payments, but the loan isn't repaid until you relocate or pass away. At that point, the lender sells the property to settle the debt. While attractive, reverse mortgages come with specific requirements and limitations. They necessitate that the residence be your primary home and impose conditions on inheritance and move-out procedures. Higher interest rates, mandatory maintenance, and potential foreclosure risks are important considerations. Always consult a financial advisor before proceeding.