What are the cons of a reverse mortgage?
When homeowners die, their spouses or their estates would customarily repay the loan. This often entails selling the house in order to generate the needed cash. If the home sells for more than the outstanding loan balance, the left over funds go to one’s heirs. But if a home sells for less, heirs receive nothing, and FHA insurance covers the lender’s shortfall.
If you’re contemplating moving for health concerns or other reasons, a reverse mortgage is probably unwise, because in the short-run, steep up-front costs make such loans economically impractical.