As with any loan product, there are several downsides to consider before you start a reverse mortgage. First, your equity decreases, often significantly, when you get a reverse mortgage. Also, unlike other loans, you won’t pay down your balance over time, so interest continues to accrue. The increased loan balance will cut further into the equity you may have remaining.
Another downside to consider is the funds you receive from the reverse mortgage may affect your eligibility for Social Security Income or for Medicare benefits. It’s best to meet with your financial planner about your situation before you consider a reverse mortgage. Inquire, for example, about what happens if you have to move to a nursing home as well as the consequences for benefactors of your estate, especially if any reside in your home.