There are a couple of clear dangers of getting a HECM loan, the most obvious being the fact that even the best reverse mortgage rates and fees can eat up your equity. This in turn leaves fewer assets to your heirs, who will also have to repay the loan balance if they want to keep the home for themselves.
The other big downside of reverse mortgages is that your health directly affects the loan, meaning that you have to remain capable of maintaining your home and keep living inside it.
Reverse mortgage qualifications dictate that If your health deteriorates so much that you have to be relocated to a medical facility for an extended period, the loan becomes due and you may lose your house.
There is also the issue of losing eligibility for needs-based government programs like Medicaid that can be affected by taking out a reverse mortgage.
The third serious downside concerns borrowers with friends, relatives, or roommates who are not on the loan paperwork but live with them in the home. These people can be left stranded and forced to vacate, even if you list them as boarders on the paperwork because no one under the age of 62 can be considered a borrower. This issue extends even to spouses.