Experts suggest consulting a tax adviser on that point. With HUD loans, which are offered through the agency's Federal Housing Administration arm, it's possible for borrowers to take out more money than the home is worth. That's because HUD gradually increases the size of borrowers' lines of credit as they age. A homeowner who lives longer than average can keep taking money out, ending up borrowing more than the home's value. If that happens, though, neither the borrower nor the heirs is responsible for the excess.
Borrowers pay a little money upfront into an insurance fund to cover that possibility.
Reverse mortgages can be used for virtually anything, but most seniors put the money toward home repairs, medical bills and other large expenses. In some cases, the money just helps supplement other income. With the Fannie Mae program, however, borrowers can even buy a house under a new option made available last year. If all this sounds confusing, that's because it is. Lenders have to go to great lengths to explain the products to potential borrowers and, even then, some don't like what they hear.