Putting it in Reverse!

Reverse mortgages have existed for nearly twenty years now, but still aren't well understood. Their complexity makes it difficult to separate fact from fiction, and not every person over 61 years old will find a reverse mortgage to be the best choice.

How does it work? It's still a loan, but is not paid back until the last owner/co-owner dies, or the home is sold or left unoccupied for one year. You may receive an equity line of credit, borrowing money as needed, or receive monthly checks for the rest of your life, like an annuity.

The loan amount is based on your age and your home's value, among other factors. Lenders don't loan the full value of your home, and there are fees. While a reverse mortgage provides a low-risk option that allows seniors to remain in their home for the rest of their lives, other investments should be depleted before giving it consideration. Your home's equity should be tapped as a last resource.

When the loan becomes due for any of the reasons stated above, the home is sold and you (or your heirs) would receive any money left over. If the house sells for less than the loan amount, the lender eats the loss. Again, this is a great option for many, but not all, qualified borrowers. Give it thorough investigation.