NEW YORK (MainStreet) —In the last four to five years, the number of people applying for a reverse mortgage has increased 30%, according to Dennis Gatto, a senior loan advisor at Long Island-based direct mortgage lender Senior Home Loans.

"There's only one way to get money without a monthly payment, and that's a reverse mortgage," Gatto said. "I've received cookies in the mail from clients who were destitute and broke and now they have money because of a reverse mortgage."

Also see:Real Estate Matchmaking Sites: The Moola Files

One reason behind the surge is the increased difficulty in securing a traditional loan or equity line of credit.

“The credit market has shrunk, and those on a fixed income are affected by that, because it’s more difficult for a bank to write a loan today,” said Brad O’Brien, group manager with Green Path, a non-profit financial education agency in Milwaukee.

Although the reverse mortgage is a government backed loan, in order to qualify for it, applicants must be 62 years and older.

“The longer the client lives, the less equity their family will inherit," said Financial Advisor Pat Strubbe. "For most of my clients, this goes against what they are trying to accomplish.”

Also see: Overseas Real Estate Investment

The upside of a reverse mortgage is the limited income and credit restrictions and lack of a monthly payment.

“The downside is without monthly payments, the loan’s interest and fees are accruing," O'Brien said. "So overtime you’re using that equity up when the interest and fees are charged, leaving the home owners with little to no equity depending on how long they stay in the property."

A reverse mortgage is similar to a forward mortgage, because both charge interest, but there is no payment with a reverse mortgage that results in a negative amortizing loan or rising debt and falling equity.

“We’re seeing stagnation in income because of retirement,” said O’Brien. “Five years ago, we counseled a decent number of people seeking a reverse mortgage but nothing near the numbers we’ve been seeing the last two years.”

With a reverse mortgage, the balance is increasing over time while interest is being charged and no payments are required. If the balance is higher than the property value, the holder would owe nothing at the time of sale.

The current 30 year fixed average is 3.47%, according to The options for reverse mortgages are fixed or adjustable rate.

“Interest rates may be slightly higher with a reverse mortgage,” said O’Brien. “We have seen a lot of seniors move towards a reverse mortgage, because a lender may not be willing to give them a conventional loan due to fixed income and decreasing property values.”

Strubbe recommends reverse mortgages for his clients on a tight budget in retirement.

“It is absolutely an option to allow them to generate more income," Strubbe said. "In some of these cases, the client's house might be one of or their biggest assets.”

Also see: Is the Realtor Dead?