Reverse Mortgages to Be Used with Caution

Reverse mortgages are a financing method for people to get to the equity in their homes. Often retirees will consider such a plan to suplement their funds. For some it works but it's not for everyone.

The way it works is a home owner finances their home with a lender and the payments are paid by the home equity meaning the owners value in the home decreases creating a larger amount owed to the bank. At some point the owners home is sold and the bank is repaid and any remaining equity is cashed out.

Keep in mind that the growing loan must be repaid. There is a chance that the equity balance diminishes greatly and the owner finds him/herself in trouble. Be sure to consult with a team of professionals before you consider this option. You want to be sure you have protected your assets.