Some consumer watch dog groups, journalists, and politicians are totally against a Reverse Mortgage. Some of these groups say it is better to sell your home and live off the proceeds.

Let me refresh your memory of what a Reverse Mortgage is:

o It is a promissory note secured by a lien against your property in the form of a mortgage to turn equity into liquid money
Well heck, this sounds like a traditional mortgage?

o There are costs/fees charged to obtain a Reverse Mortgage Loan.
Well heck, this sounds like a traditional mortgage?

o While the mortgage lien is recorded against your property you must pay your property taxes, homeowners insurance, and keep the home in good repair.
Well heck, this sound like a traditional mortgage?

o It is a mortgage that must be repaid.
Well heck, this sounds like a traditional mortgage?

o When the lien is paid in full any remaining equity reverts to the owner or heirs.
Well heck, this sounds like a traditional mortgage?

o You may live in your home and never owe more than the home is worth. The only true non-recourse loan.
Different with a traditional mortgage. Depending on the state you live and the foreclosure laws of that sate, lenders (when the loan was a cash-out refi) can come after you and/or your estate for the deficiency. In addition your credit will be affected.

There are two things that make a Reverse Mortgage different from a traditional mortgage.
There are no monthly payments, and because there are no interest payments being paid, he loan balance increases instead of decreasing. This may be why these "groups" think a Reverse Mortgage is a bad idea.

Let's take a look at Renting vs. a Reverse Mortgage.

Renting:

You will need to decide to rent a house, apartment, or condominium
You want to find a safe neighborhood

You want to live close to the services you use every day (grocery store, doctor's, activities)

You want to live relatively close to family and friends

You will need to budget for rental increases

You will need to determine how long you will live and how long the money will last to make the housing payment

You will need an alternate place to live if you run out of money to make the housing payment

Reverse Mortgage

You will never have a housing payment

You will live in the house that you paid for, created memories in, and is decorated any way you like.

You will live in the neighborhood that you've always felt comfortable and safe in

You will be close to the services you use everyday

You will never have to move

Each situation is different. There are pros and cons to all. A Reverse Mortgage is a financial tool. Just as a 401K, savings, stocks/bonds, and annuities are financial tools. Do your research before making any financial decision.

Julie A. Colangelo
www.Julie4ReverseMortgage.com