If you are a senior homeowner weighing the pros and cons of a reverse mortgage, you are not alone. This form of loan is widely advertised on television as a means to aid you in staying in your home post-retirement by making the most of your equity. Though there are several benefits of the reverse mortgage, there are also many risks involved. Here, in this article, we will address some of the pros of reverse mortgages.

You still are the homeowner
One of the biggest misconceptions associated with a reverse mortgage is that the lending agency will take away your homeownership status, but that is far from the truth. Despite the loan, you continue to be the homeowner as long as you comply with the loan terms, pay your homeowner’s insurance and property taxes.

You can continue to stay in your home
An essential benefit of the reverse mortgage is that you can keep the property and still cash from it to liquefy the asset. Further, it implies that you do not have to worry about getting priced in your neighborhood or potential downsizing.

Your heirs have options
In the case of reverse mortgages, the borrowers can pay their loan amount sooner. Alternatively, the mortgage can also end upon the passing away of the homeowner.

In the case of an estate, the legal heirs have an array of options. Firstly, they can consider selling the home to repay the debt and keeping the balance. Secondly, they can keep the home and refinance the reverse mortgage if the remaining value of the property is good enough.

On the other hand, if the value of debt is more than the property’s value, the heirs can settle the reverse mortgage by returning the title to the lender.

You can select from the multiple disbursement options
All of us have different wants and needs. So, the lending agency understands this aspect of humans and offers the homeowners different disbursement options to cater to the various needs. It includes the choice to receive a line of credit, the partial or whole amount, or a mix of both.

You can pay off your existing home loan
To avail of a reverse mortgage, your home doesn’t need to be paid off. You can even utilize the proceeds from your reverse mortgage towards paying for the existing loan. It saves you the money in hand, and you can employ it towards other expenses.

Helps in wealth preservation
There is an array of ways that reverse mortgages can aid in wealth preservation depending on your circumstances. For example, some financial experts recommend a reverse mortgage to aid with the following:

• Maximize wealth
  Your aim is always to minimize losses and maximize returns. You can use a reverse mortgage as one of the levers to increase your overall wealth.
• Preserve and further increase the home equity value
  Suppose you take the loan amount as a line of credit, then this reverse mortgage line of credit increases year after year. It can lock your present home value. If the market goes down, your reverse mortgage line of credit over time is more than the future real estate value.

Money received is not taxable
The money you receive from the proceeds of a reverse mortgage is not taxable as the IRS regards this sum as loan proceeds. Moreover, the reverse mortgage interest is also not deductible till the time you pay for it. In all honesty, the tax rules can be pretty complicated. Thus, it is best recommended to see a tax professional before shopping for a reverse mortgage.

No restrictions
There is no restraint on how you use the proceeds from the reverse mortgage. You can shop for a hearing aid, go traveling, pay for your kid’s education, shop for long-term care insurance, or save the money for a rainy day.