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You need to look at some of the reverse mortgage disadvantages before getting involved with this type of loan. Although a reverse mortgage can provide you with some benefits, there are some potential problems that you will need to be aware of. Here are some of the common reverse mortgage disadvantages that you should know about.
1. Using Your Equity
The payments that you will be receiving as part of the reverse mortgage will be coming straight from the equity in your home. The equity in your home is most likely one of your largest assets. When you use it up, you may not have any other options to look at if you get into financial trouble.
2. Closing Costs
Another disadvantage of this type of loan is that it will have closing costs associated with it. Even though you can finance these costs into the loan, they will quickly eat into the amount of equity that you can receive in the form of monthly payments.
Another disadvantage of the reverse mortgage is that not everyone can qualify for one. In order to qualify for a reverse mortgage, you will need to be at least 62 years old and have a house that is paid off or has a small loan balance.
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