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What are pitfalls of reverse mortgages
I am looing at getting a reverse mortgage. Any time I google for pitfalls of reverse mortgages all I get are sales pitches. What are the potential downsides if any of reverse mortgages. Thnaks - Joe

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There can be many.

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The sales pitch is that you can live off the equity in your home for the rest of your life. 

Not always the case.  I haven't had much experience with these personally, but I can speak from the experience that my in-laws had.  Convinced that this was the best way for them to live out there lives, they signed for a reverse mortgage that the Sales Rep said they needed.  (I call them sales reps, because they have no interest in doing what good for you and give real advice,  they are not "Retirement anylists" as they are sometimes promoted) 

They fell for the sales pitch lock, stock and barrel. They were in their early 60's and wanted to retire. They had the original mortgage that was over 20 years old, but they had taken a second and used the house as collarteral on a couple of other loans they had taken for remodeling the house. All these had to be paid off from the proceeds of the reverse mortgage. 

The end result is that they no longer own their home, They have to pay the insurance and taxes each year as well as maintain the property at a "saleable level'.  If they sell it, they will most likely walk away with nothing and the monthy check they receive is less than $200 a month.  Not exactly "Retirement,  living the high life". They struggle every year with the taxes and I'm having to pay for the monthly yard maintance on a huge lot, now that they can't keep it up. 

Now your situation will most likely be different. Specially if you have no mortgage and the property is unemcumbered. Recent changes to the government guidelines for these have made it more difficult to qualify because the government now requires that the Lenders have to be sure that the homeowner will have enough income to be able to pay those taxes and insurance, because of the high default rates.  The real benificiaries of these loans are the banks that get to add these properties to thier portfoloios.  

But take heed and do your due diligence before signing any paperwork.  You will have to do the numbers and see if it may work for you.  My suggestion is that you may be better off in the long run by selling off the property and investing all the profit into annuities or a savings plans that will pay you monthly or annually.   Everyones situation is different. Get advice from a proffesional, not a sales rep. 

Good luck 

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