Purpose

• A reverse mortgage provides additional income during retirement if other income, such as retirement accounts, Social Security and pensions, is inadequate.
  
  

Benefits

• Home equity often makes up a large portion of the net worth of seniors, so tapping into home equity can provide a significant amount of cash.
  
  

Drawbacks

• Reverse mortgages do not have to be paid off until the senior dies or sells the home; during this time interest and fees can accrue that can end up being very costly and may leave equity left for the senior's heirs.
  
  

Time Frame

• Reverse mortgages can come as one lump sum payment or multiple payments over time. If the senior lives longer than expected, home equity can run out.
  
  

Considerations

• One should fully understand all the terms of a reverse mortgage before entering into a contract.