Reverse mortgages, at least the government-backed variety that about 90 percent of borrowers choose, have undergone significant changes in recent months. Here’s what anyone considering a Home Equity Conversion Mortgage (HECM) should know about reverse mortgage pros and cons.
There are three types of reverse mortgages. They are:
LendingTree Pro Tip. If your partner is a co-borrower, both you and your partner will be able to keep living in the house even after one of you passes.
Changes to reverse mortgage laws eliminated some of the cons that used to be associated with these loans. Non-borrowing spouses who are not on the property title (as long as they’re married before taking out the reverse loan) can no longer be evicted if the borrowing spouse dies or enters a nursing facility. New financial assessments and impounding largely eliminate the risk of foreclosure. And mortgage insurance premiums for most borrowers have come down. However, one less positive change is that, in many cases, homeowners can borrow against a lower portion of their property value than they could in the past.
There are so many factors when it comes to getting a reverse mortgage, that we can’t answer yes or no for you. Consider the reverse mortgage pros and cons, get multiple quotes, and talk to friends and family before making a decision. Also, answer the following questions:
LendingTree Pro Tip. Considering a reverse mortgage, but not sure if it’s right for you? Find a HUD-approved housing counselor who can explain reverse mortgage pros and cons in detail.