1. Reverse Mortgages can be expensive if you do not plan to be in your home for a while. Although closing costs are similar to a “traditional” mortgage, the FHA charges a fee for reverse mortgage insurance. This fee is called MIP. [Mortgage Insurance Premium] Most costs are government regulated and not regulated by the Reverse Mortgage Lender.
2. Your Heirs may not inherit all of the equity. When you take out a reverse mortgage, you will be receiving the equity that you have built up in your home. As you use these funds through the years, there may be less available for your heirs.
3. If you want your home to remain free and clear of all mortgages, remember that a reverse mortgage is a loan secured against your home.
4. If you only need enough money for a small, one time expense such as a roof repair or furnace; you may want to look at other alternative financing options that are less costly in the short run.
5. If you can continue to make monthly mortgage payments and you are not struggling to make ends meet, you may want to look at a Home Equity Line of Credit or personal loan. Often times these are less expensive and easy to get if your credit and income are acceptable.