In a lot of seniors who are in the market for a reverse mortgage currently do not know about the disadvantages. Don’t get us wrong, there are a lot of reverse mortgage pros and cons, but it is very important for a senior to understand the risk involved with obtaining this type of mortgage.

The economy has been sinking deeper and deeper into depression, and the reverse mortgage market is sinking a long with it.
Despite all of this negativity, there are still seniors who need money because they are cash strapped and this type of loan works better for them than anything else right now.

What are the reverse mortgage pros?

Well for starters, a senior has to be over the age of 62 years old before they can even apply for this type of mortgage according to HUD. When a senior become strapped for cash and they have lost all of their investments in the stock market, or whatever else is caused them to the cash immediately, then they usually begin looking at reverse mortgage options.

The pros of this loan are clear: it allows senior citizens the ability to generate an income whether that be in a monthly income, a lump sum payment, a line of credit, or a combination of the three. When seniors do not have any money coming in is a serious threat to their welfare and this allows them the ability to have an income coming into their household. The homeowner must consider the house their primary residence and the home must be appraised at a value that the reverse mortgage lenders deem profitable for them.

Besides the fact of this type of loan giving these things as an inability to have it and come and be able to pay their bills, and also has its drawbacks. Many senior citizens have been defaulting on these loans and reason is because they did not fully understand how the loan works. This is why the HUD has made it mandatory that all future applicants must complete reverse mortgage counseling so that they understand all of the issues revolving around this type of loan before they agree to it.

The cons, or drawbacks, related to this type of loan come in the form of the following:

The homeowner cannot leave the home to a loved one in there will unless the loan is paid off at the time of death. This does not apply to the homeowner spouse who may still be alive and living in the home. He or she does not have a responsibility to pay the loan back until they pass away as well, at which time the loan will become do.

The home owner is responsible for all property taxes and maintenance on the home. This is the issue that gets a lot of homeowners in trouble because they did not realize that they are still responsible called property tax. Imagine a senior citizen who is strapped for cash and that also lives in an area where property taxes or very high. He or she does not know that they are still responsible for property tax, so after a year to of not paying them when they have got their reverse mortgage, they are left wondering what happened.