Last Updated on June 16, 2026 by mwyckoff
Reverse Mortgage Pros and Cons
To try to help my readers in the Sarasota and Bradenton areas better understand the ins and outs of reverse mortgages, I will describe in this article some of the benefits of a reverse mortgage and some of the things to consider in determining whether a reverse mortgage is right for you. I will do so by listing and explaining some of the pros and some of the cons of a reverse mortgage.
Reverse Mortgage Pros:
1. THE LENDER MAKES PAYMENTS TO YOU for the equity in your home. Rather than the homeowner making a monthly mortgage payment to the lender as is the case with a traditional mortgage, with a reverse mortgage the lender pays you. In general, you have the option of being paid out of the equity you have in your home (the value of your home minus the balance due on the mortgage loan) by taking a lump sum (usually in 2 phases) or getting a line of credit or a combination of the two.
2. You stay in the home without making any payments on the home loan.
3. It can be used to pay off an existing mortgage. You can pay off an existing mortgage that currently requires you to make monthly payments to the lender.
4. YOU ARE NOT PERSONALLY LIABLE TO REPAY THE LOAN. This is a great benefit. The lender only has right against the home, not you personally. As a result, they are only permitted to recover repayment under the reverse mortgage up to the value of the home. This is true even if the balance due under the mortgage loan greatly exceeds the value of the home at the time the event occurs that requires the loan be paid.
5. Your heirs may inherit the home after they pay off the balance owed under the reverse mortgage loan.
6. A GREAT CREDIT SCORE IS NOT A NECESSARY REQUIREMENT. This is another great benefit. You may qualify for a reverse mortgage regardless of your credit score.
Reverse Mortgage Cons:
1. The amount due under your reverse mortgage increases over time. Unlike a traditional mortgage where your monthly payments go toward reducing the amount you owe, under a reverse mortgage, the balance due under your loan goes up over time as interest accrues. If this is confusing, please give me a call or send me an email so I can help clarify it for you.
2. The fees associated with a reverse mortgage are typically higher than those of a traditional mortgage loan. The good news is that the fees can be paid out of the loan amount. They do not have to be paid by you out-of-pocket to get the benefits of a reverse mortgage loan.
3. Many people simply do not understand reverse mortgages. This is not surprising because they are quite different than an ordinary mortgage loan most people are familiar with. I hope this article and other articles I have written on my website will help you understand reverse mortgages. They are unique “animals” so please do not feel embarrassed if you are confused and don’t completely understand them. I invite you to give me a call anytime so that I can do my best to help you understand them more fully.