Thinking About a Reverse Mortgage? Pros and Cons to Consider

If you’re a homeowner aged 62 or older, you may have accumulated substantial equity in your home, potentially owning it outright. As everyday living costs increase, it’s understandable to consider using some of that equity to cover your daily expenses. A reverse mortgage may be your answer.

However, while reverse mortgages can be lifesavers for some homeowners, they can be complicated, and they aren’t designed for everyone. In this guide, we lay out the reverse mortgage pros and cons so you can decide if taking this step might be the right move for you.

What is a reverse mortgage?

Reverse mortgages are loans designed for seniors and retiring homeowners. These loans let the homeowner convert their home equity into money while allowing them to continue to live in their home. Here are some common qualifications for reverse mortgages, according to the Consumer Finance Protection Bureau:

You must be 62 or older.
The property must be your principal residence.
You must own your home outright or have a low-balance existing mortgage that you can pay off with the reverse mortgage proceeds.

Other qualification requirements vary depending on the type of reverse mortgage you choose.