When you need some extra income during your retirement, you may have thought about getting a reverse mortgage to help with the cash flow. And while reverse mortgages do have the potential to help make your retirement financially more comfortable, there are some pitfalls you need to be aware of. Here are six pitfalls to avoid if you are considering getting a reverse mortgage. 

Be aware of excessive costs 

Depending on who you go with for your reverse mortgage there may be some hidden costs that really start to add up over time. If you use reverse mortgage funds to pay for the fees associated with the financing, then there is less money for you to use. It’s important you are aware of all the fees associated with this reverse mortgage. 

Less inheritance for your heirs

When you take out a reverse mortgage, you may be reducing the amount of inheritance that you are leaving to your heirs. This loan may reduce the equity you have in your home or maybe even completely diminish it. This may impact the amount of money you are leaving to your children and grandchild, so that may be something to keep in mind. 

It could interfere with government benefits

In some cases, you could impact any retirement or government benefits you receive as the payments from your reverse mortgage will count as income against your total annual income. This means if you are on benefits where there is a maximum allowable amount to be earned, those benefits could be reduced. 

You still need to care for your home

Even with a reverse mortgage, the costs of homeownership are still going to be your responsibility. This will include items like property taxes, condo fees (if you have them) and any maintenance you need to do on the property. Some lenders will have the option to set aside a certain amount for these costs and they will be part of the funds you borrow but are not released as cash to you. 

You will not be able to move out of your home

In order to get a reverse mortgage on your home, it needs to be your primary residence. If you live away from your home for more than 6 consecutive months it will no longer be considered your primary residence and you will then need to pay back the loan, sell your property or transfer the title of the home to the lender so that they do not foreclose on your home. 

If you need to be away for medical reasons, you can be in a nursing or long-term care facility for up to 12 months before it is no longer considered your primary residence. 

Beware of scammers

Many of the people who are in the market for a reverse mortgage are people who are retired, and therefore are often elderly. Scammers will target elderly people for get rich quick schemes or try to get them to agree to very costly home repairs. 

In some cases, they may also pressure homeowners into signing power of attorney forms so that they can control the proceeds of the sale too. Make sure you know exactly who you are dealing with, and what you are agreeing to. 

Contact Sure Loan today

If you are considering getting a reverse mortgage, it is important that you work with a professional who can explain everything and help you avoid these pitfalls. For more information Contact Sure Loan today. 

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