A tenure reverse mortgage provides monthly payments for as long as the owner lives in the home. Potentially these payments could exceed the total value of the home, but Williams notes that in practice, they rarely do. The elderly also may use a reverse mortgage as a line of credit, choosing to use the funds only when needed for health care or other major expenses. While reverse mortgages may be advantageous in many instances, Williams says the income realized from them may not always be significant. Financial professionals need to weigh the added income from them against the interest rate, fees and other costs of the loan.
Reverse mortgages take into account factors such as marital status, gender and age.
Williams says that in general, the oldest, the unmarried and the low-income have the most to gain from reverse mortgages. On the other hand, she says, married couples probably have the least to gain. Reverse mortgages are also best for those persons who have a strong emotional attachment to their home. She says those who don't have such an attachment might find it more advantageous to sell their house, downsize and invest their profits. Williams' study was published in the latest edition of the journal of the Association for Financial Counseling and Planning Education.