Reverse mortgages have risen in popularity from about 16,000 to 18,000 in the early 2000’s to well over 100,000 in 2007. Mainly because there is a need for seniors (you must be 62 or older) whose homes are paid off or have a lot of equity in their home, but have little savings or income. Basically it is a loan, usually at low interest, that as long as you live in your home, you do not have to make payments. It only gets repaid when you move out of your home or die.

Reverse mortgages allow you take a percentage of your home’s equity out, tax free. A reverse mortgage is different from a home equity loan in several ways. With a home equity loan, you must be able to show income and a means to repay. A reverse mortgage does not have this requirement. The amount of cash that you can receive with a reverse mortgage depends on several factors, but mainly on how much equity you have in your home and your age. You can receive the money in a lump sum, or as a monthly income stream or even a line of credit that is available when you need it. Keep in mind that you must live in the home and it must be your main residence.

One important advantage is that you do not risk loosing your social security if you obtain a reverse mortgage. Another is, it does not have to be repaid until the last borrower dies or moves out of the home. But there are risks involved. Especially if you do not consult a reputable and professional expert on reverse mortgages. There are many so called “reverse mortgage experts” that are out to make a fast buck and prey on unsuspecting elders and retirees. So it is absolutely necessary to conduct a thorough search for a reputable firm.

Although a reverse mortgage has many pluses, there are other risks that you should know about. Here are some of the risks of a reverse mortgage:

1) The costs to initiate a reverse mortgage are usually much higher than taking out a home equity loan and these costs can sometimes reduce the equity in your home.

2) It is possible to loose your home if you have to move to an assisted living facility or nursing home for a length of time or even for a lengthy hospital stay.

3) The extra mortgage insurance that you will need can be costly. This is necessary to protect the lender for a number of factors, including a possible decline in your property value.

4) If you do not maintain repairs on your home or stay current on property taxes and insurance, the lender can take the property.

The above information on reverse mortgages is only for the purpose of a general overview and by no means is it meant to be a sole resource for considering a reverse mortgage. Keep in mind that a reverse mortgage is a big financial decision that will affect your future and decrease the value of the estate you leave to your heirs. A good place to begin your research is to contact the department of Housing and Urban Development ( H U D ).