by 
The Curious Bag
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Older homeowners may have a great opportunity to access the funds in their home's equity using reverse mortgages. However, some of the disadvantages of these types of mortgages should be considered including their expensive fees and longer approval process.
Facts
Homeowners who are 62 years old or older may be eligible for a reverse mortgage depending on how much equity they have in their home.
Rising Debt Loans
Reverse mortgages are considered rising debt loans because interest is charged on the amount that is paid out from the home's equity, so borrowers may end up owing more than their home's value.
High Loan Fees
Reverse mortgages come with high fees, including loan origination, counseling, mortgage insurance and appraisal fees. Some fees may be as high as 5 percent to 6 percent of the value of the home.
Longer Loan Approval Process
The approval process may be longer and more complicated for these types of mortgages because borrowers are required to receive counseling and final approval from a HUD-approved counselor .
Loss of Home Equity
As the homeowner receives payments, the equity in their house diminishes until the house is sold to pay back the loan balance. As a result, anyone who inherits the home from the owner will only receive what is left over after the mortgage is paid.
Source:
FTC.gov: Reverse Mortgages: Get the Facts Before Cashing in on Your Home's Equity
Senior Journal.com: Steep Fees Burden Reverse Mortgages; Gail Liberman and Alan Lavine
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