Shifting Your Mortgage Into Reverse

With people living longer, healthier lives, today's retirees on average enjoy a much longer retirement than that of their parents' generation.

But a longer retirement, combined with rising medical expenses and property taxes, means having to be more resourceful at finding ways to fund those golden years.

And on that front, there's good news for seniors who own their homes and want to continue living in them. Despite higher property taxes, utility bills and other costs, reverse mortgages have just become more attractive.

Competition is heating up in the reverse-mortgage market. That means that banks are cutting margins, which gives seniors more money, and lenders are creating more options for withdrawing that money.

How Reverse Mortgages Work

Aptly named, the reverse mortgage works the opposite way a regular mortgage does. In a regular mortgage, you make payments to the lender. But with a reverse mortgage, the lender makes payments to you. To qualify for one, you must be at least 62 years old and own your own home.

You can receive your reverse mortgage payments either in a lump sum, as a monthly cash advance, as a line of credit that allows you to decide when and how much is paid to you or as a combination of all of those.

Granted, this is a scary concept for the frugal seniors who have spent a lifetime paying down the mortgage, and the conventional wisdom has generally been that you should try to avoid taking on debt during retirement. However, with reverse mortgages, you remain in control of your property and can sell at any time. The loan is only repaid when you sell your home, permanently move out of it, or die. And no matter how long you live, you can't be forced out of your home.