• Reverse mortgages may not be a good option for all seniors.house image by kruszek from Fotolia.com
  
  Advertisements about reverse mortgages abound in all media, especially television. A reverse mortgage is a type of mortgage for seniors that allows a homeowner to tap into the equity available in the home. (Equity is the value of the home minus any outstanding debts related to the property.) Reverse mortgages don't need to be paid back until the homeowner dies or moves out. This may seem great, but reverse mortgages have multiple pitfalls.
  
  

Higher Fees

• As discussed by Aleksandra Todorova of smartmoney.com and reversemortgagedisadvantage.com, one of the main differences between a regular mortgage and a reverse mortgage is the conditions under which it needs to be repaid. A bank cannot collect on the reverse mortgage loan unless the homeowner moves from the property or passes away. To the bank, this makes the reverse mortgage loan a much higher liability. As a result, banks try to make up for the risk by charging significant fees in the form of high interest rates or closing costs.
  
  

Life Variances

• For a reverse mortgage to make sense, a homeowner has to be fairly confident that she won't need to move out of the house. Otherwise, the bank will call in the loan and the homeowner will need to start making payments. The problem is that it isn't always possible to foresee reasons to move. For example, as property taxes rise, it can become too expensive to maintain the house. Other examples are if a senior loses income they thought was secure or develops an unexpected medical condition that requires they be placed in a nursing facility. Reverse mortgages don't accommodate these life variances and assume all factors will remain the same.
  
  

Low Income

• A reverse mortgage may interfere with low-income assistance programs many seniors use, according to newretirement.com--i.e., the mortgage loan may move a senior out of the income bracket that qualifies them for financial help. The senior may be left having to use some of the loan to cover expenses they didn't have before because of these disqualifications, which ends up essentially decreasing the value of the loan.
  
  

Inheritance

• Many seniors leave their homes to their children (heirs) as inheritance. Taking out a reverse mortgage is like spending this inheritance, so heirs may not be pleased with a senior's decision to take out this type of loan. However, seniors still can leave a home with a reverse mortgage to their children. It just means that the heirs will have to decide whether to sell the house or pay off the mortgage.