REVERSE MORTGAGES

The key benefit of a reverse mortgage, available to homeowners ages 62 and older, is the ability to tap into a portion of your home’s equity value without having to sell your home. You can withdraw a lump sum of money or create a line of credit similar to a home equity line (HELOC), from which you can draw cash when needed.
The amount you can borrow depends on your age (the older you are, the greater the amount), current interest rates and the value of your home.
In many cases nothing needs to be paid back to the lender as long as you or your spouse are alive and living in the home. After you pass away, your estate pays back the principal plus accrued interest, and any and all deferred charges to the lender, typically by selling the property. Any remaining equity (?) would go to your heirs. The best part: If there’s not enough equity in the property to cover the loan, the FHA pays the difference to the lender, preserving the remaining assets in the estate for your heirs.
Reverse mortgages, however, don’t come for free. There are closing costs and loan origination and servicing fees similar to and often more expensive than what you’d incur with a traditional mortgage, not to mention FHA insurance premiums to cover any lender losses from equity declines.
And, of course, there is the interest that you will accumulate on the loan, which in the case of a line of credit is variable based on prevailing rates.
All these factors make reverse mortgages much more expensive than traditional mortgages. None of these costs need to be paid out-of-pocket initially, as they may be, and usually are, deferred until repayment of the loan, nonetheless, they do limit the amount you can borrow and also affect the amount of equity your heirs have to sacrifice when your house is eventually sold.
There are other downsides to a reverse mortgage as well.
• The loan can be called early due to nonpayment of property taxes, homeowners insurance or failure to adequately maintain the property, potentially forcing you to sell the house prematurely.
• Having extra money available (especially when taken as a lump sum) puts you at risk of spending it too quickly or becoming a target for financial abuse by family or financial advisers. That’s why a reverse mortgage should never be used except as part of a well-thought-through retirement plan.
My conclusion:
In short I find that Reverse Mortgages are far too expensive for what you get. The closing costs, the mandatory Mortgage Insurance Premiums, accumulated Interest charges, and fees add up quickly! That said, there are cases where a Reverse Mortgage may be advantageous and should be considered.
There are alternatives to a reverse mortgage if you want to access some of the equity built up in your home. The simplest is to downsize by selling your current home and either buying or renting a less expensive, smaller house. Alternatively, if your adult children have the financial wherewithal, you can create a sale-leaseback arrangement in which you sell the house to one (or more) of your children and then rent it back using the cash you get from the sale. Your children benefit by getting rental income and tax write-offs (as long as you structure the transaction properly, according to the IRS), and you get the cash. However, once the lease expires, your children have the right to kick you out. You may not be comfortable giving up that degree of control over your home.
A private reverse mortgage is another option. You’ll benefit because your children will charge you less than commercial lenders, your up-front costs will be lower and there won’t be ongoing mortgage-insurance expenses. Plus the interest rate – which the IRS sets each month – will be lower than what commercial lenders charge. But again, it’s important to structure the deal so that it passes muster with the IRS.
Reverse mortgages have emerged as a viable retirement planning tool as long as they are used carefully and thoughtfully. However I do not believe they should be the first choice for most people. 
Richard Garner E.A. Gilbert, Arizona ph.623-500-2654