Authored by Rodney Southern in Mortgages
Published on 01-08-2009
The pros and cons of reverse mortgages make deciding whether or not to take one a difficult decision. If you examine them carefully, though, they should point you in the right direction for figuring out whether or not a reverse mortgage is for you.
One of the biggest questions to ask when examining the pros and cons of reverse mortgages is how long your life expectancy is. These days healthy people in their early seventies with no major health risks like smoking or being overweight can expect to live well into their nineties. You may not want to drain the equity of your house if further down the line you’ll need it to pay for a nursing home or home health care.
In addition, if you’re determined to leave a financial legacy to your children and your primary asset is your house, the pros and cons of reverse mortgages would indicate that this is not the right choice for you. It’s very likely that the equity in your home will be gone at the end of your life and the mortgage company will own your home.
On the other hand, the pros and cons of reverse mortgages balance on the positive side if you have no children and prefer to have a steady monthly income. In such cases where the homeowner has no worries about bequeathing money, this can be a good decision to make in order to live in the manner to which you’ve grown accustomed after retirement.
Also, people who have children that are well off and don’t want to be a burden on them may find the pros and cons of reverse mortgages lead them towards this decision. If your children don’t need financial assistance now or after your death, and you are determined to maintain your independence, then a reverse mortgage may be the right choice for you.
At any rate, when discussing the pros and cons of reverse mortgages it’s important to involve your family in the process and get advice from a qualified financial adviser. The best person to choose as an adviser in this case is someone who’s totally independent, which may mean you have to pay an hourly fee. Finding out the truth of the pros and cons of reverse mortgages may not be possible if the person who’s advising you is selling a product, whether it’s a reverse mortgage itself or some competing product that’s intended to meet your financial needs. A truly independent advisor will help you sift through both the pros and cons of reverse mortgages and come to a decision that’s right for you based on your financial situation, your family dynamics, your monthly budget and your tax bracket.