While accessing home equity with a reverse mortgage has many advantages, it’s not right for every situation. Weighing these key pros and cons can help you determine if this loan aligns with your financial goals and take the next step toward an informed decision:
A reverse mortgage pays off your existing mortgage (if any), freeing up your budget from those payments and leaving more cash in your pocket to use as you see fit.
You can access any remaining equity in a way that best suits your lifestyle, including as a lump sum, monthly installments, or as a line of credit that’s ready when you need it.
Your loan proceeds are not considered income, which gives you access to usable cash without tapping other investments and creating a taxable event.
The property title remains in your name, and you can continue living in your home as long as you wish, so long as you comply with the loan terms.
Because your funds come in the form of a loan against your home equity, the balance accrues interest and will grow over time.
Like many mortgage products, the loan has closing costs and fees, but many of these can be rolled into the loan and are not paid out of pocket.
Because the loan draws from equity and accrues interest on the amount borrowed, it is likely to impact what your heirs inherit. But regardless of how much equity remains when the loan comes due, they will not inherit the debt.
There is a chance that your loan may not be enough to meet your needs, but even if your proceeds run out, you still own your home and can stay in it as long as you meet the loan requirements.3
1The borrower must meet all loan obligations, including living in the property as the principal residence and paying property charges, including property taxes, fees, hazard insurance. The borrower must maintain the home. If the homeowner does not meet these loan obligations, then the loan will need to be repaid.
2Not tax advice. Consult a tax professional.
3The right to remain in the home is contingent on paying property taxes and homeowner’s insurance, maintaining the home, and complying with the loan terms.
A reverse mortgage is a loan exclusively available to homeowners ages 55+4 that converts a portion of home equity into cash that can be used virtually any way you see fit. The loan balance grows over time and must be repaid when you sell the home, no longer use it as your primary residence, pass away, or don’t comply with the loan terms.
For over 20 years, homeowners across the country have trusted us to help them weigh the reverse mortgage pros and cons and make the best decision for their future.
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1The borrower must meet all loan obligations, including living in the property as the principal residence and paying property charges, including property taxes, fees, hazard insurance. The borrower must maintain the home. If the homeowner does not meet these loan obligations, then the loan will need to be repaid.
2Not tax advice. Consult a tax professional.
3The right to remain in the home is contingent on paying property taxes and homeowner’s insurance, maintaining the home, and complying with the loan terms.
4For certain HomeSafe products only, excluding Massachusetts, New York, and Washington, where the minimum age is 60, and North Carolina and Texas where the minimum age is 62.
5Finance of America is listed as Best Reverse Mortgage Lender by Bankrate in this article, published January 2025.
6Finance of America is listed as Best Reverse Mortgage Companies by money.com in this article. Finance of America is a paid advertiser with money.com.
7As of May 2024. Top Reverse Mortgage Lenders must have verified reviews on ConsumerAffairs, an overall satisfaction rating of at least 4 stars, and at least a 2:1 ratio of 5-star to 1-star reviews. Finance of America Reverse LLC pays a monthly fee to participate in the ConsumerAffairs Authorized Partner Program.
