Dangers of reverse mortgages include their complexity, potentially pushy sales pitches, high fees and the possibility of the surviving spouse being evicted if the other dies, notes Investopedia. There might also be strict rules regarding the circumstances under which the property can be foreclosed and the loan repaid.
The contracts for reverse mortgages can be full of rules regarding interest, repayment, default and fees that are difficult to understand, according to Investopedia. It is best for the contract to be looked over by a reputable and experienced lawyer before it is signed.
Financial planners and others who offer reverse mortgages may be paid a commission, which is why some of them can be forceful when attempting to persuade a person to accept a reverse mortgage, explains Investopedia. While reverse mortgages come with their own unique advantages, those advantages can come at a great financial cost. It is best to take some time to think about a reverse mortgage and how it can be used for funding before agreeing to one.
Regarding the stipulations under which the loan must be repaid and the property can be foreclosed, one stipulation may be the property has to be resold or the mortgage repaid if the house sits vacant for a certain length of time, states Investopedia. This can be a problem for senior citizens with health complications who have to stay in the hospital or an assisted living center for several months.