Similar to other forms of mortgage loans, there are a few disadvantages of reverse mortgage loans which you should know. The probability of occurrence of some of these drawbacks is dependent on individual circumstances. However, it is always a beneficial idea to get acquainted with some of the reverse mortgage dangers.

Following are the principal reverse mortgage disadvantages: 

1) Most of the reverse mortgage loans have variable rates of interest. If the market indices vary, then the interest rates would also vary. This can be a disadvantage due to the uncertainness. Nevertheless, it may also act as a benefit if the rates dip subsequent to your obtaining a reverse mortgage.           

The concept that the rates might increase is not as significant as you do not have to make monthly payments. The increase of rates only suggests that you might not receive the amount of monthly payment that you expected or your home equity may go down quicker than you anticipated. 

2) As reverse mortgages function by lowering the equity of your home, you can utilize the maximum portion of the equity, keeping aside a small amount of money for you and your inheritors. But you should keep in mind that there is a non-recourse clause applicable for the majority of reverse mortgages which does not allow you or your inheritors to owe any amount of money that exceeds your home value.

3) As the proprietorship of your home is held by you, you have the responsibility for the principal costs related to the upkeep of the house: utilities, real estate taxes, maintenance and insurance.

4) One of the principal drawbacks of a reverse mortgage is that a number of lenders ask for closing costs and origination fees for this loan. Some banks may also demand servicing fees within the term period of the reverse mortgage. It may cost thousands of dollars higher than a traditional mortgage loan. Nevertheless, these charges are frequently combined with the mortgage and you do not have to pay them as upfront fees.

5) In your income tax return, the interest on reverse mortgage is not considered as a deductible till the loan is repaid (partially or completely). 

6) Lastly, there are a number of comparatively inexpensive solutions for your financial difficulties (line of credit, refinancing and so on) than going for a reverse mortgage. Obviously, a number of individuals conceive that the advantages of reverse mortgage outmatch its disadvantages.     

These are some factors regarding reverse mortgage that you should remember prior to going for making an application for the same. The features of reverse mortgage are different from that of a traditional mortgage. You should visit a counselor who will guide you about reverse mortgage terms and conditions and help you understand reverse mortgage advantages and disadvantages better.