Features

• The amount you qualify for depends on your age and the value of your home. Your current debts are not considered when you apply and you don't need income to qualify for a reverse mortgage. You may currently apply for up to $417,000. Once approved, you may choose to receive the proceeds in monthly payments or in a lump sum. You can also elect to establish a line of credit and make withdrawals when necessary.
  
  

Function

• An advantage is that there are no restrictions on how you may use the proceeds of a reverse mortgage. Pay your real estate taxes, make home improvements, pay doctor bills or invest the money for a more secure future. Use the money for gifts or pay for tuition for yourself or someone else.
  
  

Disadvantage

• A disadvantage of a reverse mortgage is that expenses can be steep. For example, you will be required to buy expensive mortgage insurance. On a loan for $250,000, expect to pay $5000 for insurance in addition to typical closing costs for attorneys, appraisals and points. You may, however, finance these costs as part of your loan. The majority of reverse mortgages carry a variable interest rate which will vacillate over time.
  
  

Benefits

• Your home remains in your name and you maintain ownership. While you must continue to pay taxes, insurance and home maintenance costs, your current mortgage is fully paid off with the reverse mortgage proceeds. If your home loses value over time due to market conditions, your liability on a reverse mortgage is protected by a "non-recourse" feature, which means you can never owe more than the appraised value of the home.
  
  

Considerations

• Your home must remain your primary residence while a reverse mortgage is in place. When you leave your home permanently, the loan will come due and the entire balance must be paid. Pay careful attention to the residency rules. If you leave your home to stay in a nursing home, your loan may become due. The reverse mortgage may be paid off with available personal funds or through the sale of the home.