
The pros and cons of a reverse mortgage
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:
Pros
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Eliminate your monthly mortgage1
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.
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Flexible payment options
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.
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Tax-free cash for virtually anything2
Your loan proceeds are not considered income, which gives you access to usable cash without tapping other investments and creating a taxable event.
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Continue to own and live in your home3
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.
Cons
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Loan balance accrues interest
Because your funds come in the form of a loan against your home equity, the balance accrues interest and will grow over time.
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Upfront costs
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.
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Estate impacts
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.
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Potentially not enough
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.
What is a reverse mortgage?
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.
Unlock life on your terms
One of the largest pros of a reverse mortgage is the flexibility it gives you to make financial choices that fit your lifestyle. Whether it’s covering everyday expenses, planning for the future, or simply enjoying what life has to offer, your home equity can be used to help craft a future that works for you.
Get Peace of Mind
Reduce stress around money and gain the confidence of knowing you can stay in your home3 without monthly mortgage payments.1 With fewer financial burdens, you can focus on what truly matters—your health, happiness, and the freedom to enjoy life your way.
Enjoy Life’s Possibilities
Give yourself the flexibility to say “yes” to new opportunities and experiences – whether it’s renovations to make your forever home even more comfortable, a well-deserved vacation, or simply more room in your budget for the things that bring you joy.
Support Loved Ones
Whether it’s assisting a child with a home down payment, contributing to a grandchild’s education, or providing financial stability to your family, unlocking your home’s equity can help you create a lasting impact for those who matter most.
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.
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.
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Important legal disclaimers
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.