Who Benefits From a Reverse Mortgage? What Are Its Pros & Cons?

Reverse home mortgage proves to be a good tool for seniors; it tends to increase financial well-being in retirement and affects the quality of life. Before diving into its benefits, let’s first understand what is a reverse mortgage? This is actually a form of cash-out refinancing that allows older persons above 62 to convert the real state property into spendable cash. Reverse Mortgage is considered a key component providing funds today and tomorrow. People who are 62 or above can borrow loans against the value of his/her home and receive funds as a lump sum.

 Types of Reverse Mortgages

When you plan to take a reverse mortgage, you’re required to proceed with one among these 6 ways.


This option comes up with a fixed interest rate.


This option is also known as a tenure plan. When you choose this option, the lender will make steady payments to the one who borrows.

Term Payments

In this option, the lender gives the borrower equal payments every month for a period of time the borrower chooses.

Line of Credit

You can have the borrowing amount as needed. The homeowner is needed to pay interest only on the line borrowed from the credit line.

Steady & Equal Monthly Payments along with a Line of Credit

When you choose this option, the lender provides steady monthly payments. If you as a borrower need more money at any point, you can access the line of credit.

A reverse mortgage usually revolves around a lump sum, monthly payments, periodic advances via a line of credit, or the combination of these.

Have a Look at Some Advantages and Disadvantages of a Reverse Mortgage

For the right set of circumstances, a reverse mortgage can increase your finances now and after retirement.

Reverse Mortgage Advantages

Reverse Mortgage is Flexible

It is a flexible product, thereby can be used in different ways by different borrowers’ types. If you are in need of finance, you can utilize a reverse mortgage to de-stress your finances. However, those who have adequate resources can utilize this as financial planning too.

You can improve your Finances Immediately

With it, you can stay in your home with absolutely no mortgage payments. Moreover, you get access to money to use for any purpose.

Low Default Risk

A reverse mortgage is a better idea as it provides no payment option until you permanently leave the house. You’re required to pay for upkeep and taxes and the insurance on your home.

No Downside & Restrictions

In the case of a reverse mortgage, you have never more than your home’s value when the loan is repaid. This means if you secure a reverse mortgage and then home prices decline. Also, there are no restrictions. You can use the funds for various purposes whether you go on traveling, want to pay your children education fee, and purchase long term insurance; It’s all up to you.

 Reverse Mortgage Disadvantages

Though reverse mortgages come up with several benefits, it is not for everyone. Here are some points you need to consider:-

  • Beware of a reverse mortgage when you’re eligible for low-income assistance

If you’re eligible for low-income assistance, you need to be careful that reverse mortgage does not disqualify you from Federal or State government assistance.

  • Reconsider if you’re planning to move

A reverse mortgage is not for you if you are planning to move in the near term. The reverse home mortgage will remain due if your home is no longer your primary residence.

  • Reconsider Again If You’re Willing To Reduce Your Heirs Inheritance

If you want your home to go to your heirs, it is not a good decision to go for a reverse mortgage. It can affect your estate and decrease your home equity. 


A reverse mortgage is stress-free due to low mortgage rates. You can easily use the funds in retirement for healthcare, home repairs, and others. But the thing is they work nicely for some homeowners but not for all. Whenever you plan to take from Lawhorn Mortgage Company you’re required to consider your finances, estate plans, and tax implications. Go for it only when you find it will deliver positive results. You can either consult professionals for more information.

* Specific loan program availability and requirements may vary. Please get in touch with your mortgage advisor for more information.