Farm Reverse Mortgage: Pros and Cons

Farm Reverse Mortgage: Pros and Cons

A lot of people have benefited and many more are still benefiting from various forms of reverse mortgages including farm reverse mortgages. However like with most other things, there are usually two sides to the coin, there are associated pros and cons with a reverse mortgage loan.

Advantages ...

Among the obvious reverse mortgage advantages is that in many cases it is the only loan option left. For people over 62 years of age, who are retired and with little accumulated savings getting a willing lender is kind of difficult. Even with impressive credit scores the lender is still skeptical about the individual’s ability to repay the loan. This is unless of course the individual is rich or owns a company. For many of such ones their farm or home is the only property of real value that they have.

Getting a traditional loan against the property will be expensive and will also expose them to the risk of losing the property. With a reverse mortgage loan, you reverse the value of your farm and access the funds gradually. You gradually use up your farm value and use the funds to improve your present standard of living, your health and your farm. Another advantageous feature is that the lender does not get repaid until you either move out of the property or the property is sold at you death. So you can sit back and enjoy the loan with no fear of repaying or losing your farm.

Disadvantages

One of the major cons that are associated with a farm reverse mortgage is that you will not be able to bequeath the farm to your children or heirs after death. Many people would not like to take a loan to improve their farm and then not be able to leave for no one when they die. Then there is also the cost of getting a farm reverse mortgage loan. There are a lot of fees and costs associated which many feel is quite high. Finally, after taking a reverse mortgage loan you have to live with the knowledge that the value of your asset is diminishing and still have to bear associated costs like tax, repairs on farm and insurance.