Reverse Mortgages tend to be generally favored for those homeowners older than 62 who tend to be house-rich and cash-poor. The greying of American baby-boomers continues. For many, their home is their most significant asset as they head into retirement.

With a reverse mortgage, the lender makes payments to the borrower; i.e., the reverse of a normal mortgage. The loan is repaid from the proceeds of the estate when the borrower moves or passes away.

Those considering a reverse mortgage are wise to consider the following:

* understand that often adult children help their senior parents secure the loan,
* how to keep your second home deed in your and your spouse’s name,
* what are the property requirements and financing fees of the loan,
* how to select among a multitude of lenders,
* spending the proceeds and estimating leftover equity,
* understanding how to sharing the decision making process with family members.

While a reverse mortgage provides a guaranteed source of tax-free income for the rest of the homeowner’s life, the loan can be very expensive. Costly fees, interest rates, mortgage insurance, and closing costs may apply to acquisition and maintenance of the loan.

Also, while the loan allows the recipient to remain in the home, a reverse mortgage reduces the home equity amount left to the heirs.

And, although the homeowner is relieved of the responsibility of making a monthly mortgage payment, a reverse mortgage is more expensive and binding than establishing a home equity line of credit.

To read more about reverse mortgages, visit the AARP, the US Department of Housing and Urban Development (HUD).

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