7 Reasons to Avoid Getting a Reverse Mortgage

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You’ve probably seen numerous ads featuring celebrities promoting the benefits of a reverse mortgage. For those nearing retirement, a reverse mortgage can seem enticing. However, it’s crucial to exercise caution when choosing home mortgages.

A reverse mortgage allows homeowners over 62 to access their home’s value without selling or renting it. Unlike a traditional mortgage where you pay the lender, with a reverse mortgage, the lender pays you monthly. Despite this, it’s still a loan. While repayment isn’t required as long as you live in the house, the loan will need to be repaid eventually. Though it might appear to be a good supplemental income option, is it really?

Consider these seven reasons why you might want to avoid a reverse mortgage.

1. Future Care Needs

As we age, the likelihood of needing nursing or assisted living care increases. A reverse mortgage is contingent on you living in the home. If you need to move to a care facility, you’ll be required to pay off the loan, which, combined with high care costs, could be financially overwhelming and even result in homelessness.

2. High Fees

Reverse mortgages can be expensive due to numerous fees, which can exceed 10% of the loan amount. These include closing costs, mortgage insurance fees, and origination fees, potentially outweighing the benefits.

3. Accrued Interest

Even though you’re not making payments, interest accumulates on the loan amount each year. If the loan isn’t paid down, it continues to grow, potentially costing you more in the long run.

4. Impact on Benefits

Government benefits like Medicare and Social Security are unaffected, but programs like Medicaid have income limits. Excessive withdrawals from a reverse mortgage could disqualify you from such programs. It’s crucial to understand how a reverse mortgage could affect your benefits.

5. Reduced Inheritance

A reverse mortgage decreases your home’s equity and increases debt, reducing the amount you can leave to your heirs. If the loan isn’t paid off before you pass away, your home may be sold to repay the lender, complicating your financial legacy.

6. Impact on Co-residents

If you live with someone not on the loan, such as a younger spouse or relative, they may not be able to stay in the home if something happens to you. This is especially important if they are under 62 and cannot be a borrower on the mortgage.

7. Risk of Losing Your Home

Despite claims that you’ll never lose your home, the costs of insurance, repairs, and property taxes can become burdensome. Failure to keep up with these expenses puts you at risk of losing your home.


While a reverse mortgage might seem like a good idea from advertisements, it comes with significant risks and potential consequences for you and your family. Carefully weigh these considerations before deciding. If the drawbacks outweigh the benefits, it might be better to adjust your lifestyle instead.

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