OK, sorry to preach, but I just saw a blog about Reverse Mortgages by Michael Pinter.

First, let me commend him for his blog [I can't believe that so much media attention

about Reverse Mortgages is still negative] where he plainly states he doesn't

understand all the negative publicity about Reverse Mortgages.  Second, I keep

saying the same thing, those that are so negative about reverse mortgages usually

do not have all the correct facts about reverse mortgages!

Let me address several issues made in the comments:

1. Reverse Mortgages WERE  a rip-off -
   • Honestly, to those that know or remember the reverse mortgage products from the '70's & '80's, they WERE a rip-off, but the FHA/HUD backed HECM Reverse Mortgage programs will not allow this - and for good reason.  There used to be equity sharing, forced annuities, etc.  These are no longer allowed - period! 
2. The bank gets the home when the person dies OR the bank takes title to the home when I sign the reverse mortgage papers.
   • Or any other version of this perception.  This is one of THE most common myths.  I've addressed this several times in my blogs [blog1] [blog2] [blog3] [blog4] [blog5] [blog6] - boy did I say it that many times already (that I could easily find) yikes ! ! !  But it has been said many times over, and it can't be repeated enough -

     YOU OWN THE HOME WHEN YOU HAVE A REVERSE MORTGAGE! 

     It is a lien on the house, plain and simple.  No matter if you have 1, 10, or 100 liens, YOU still own YOUR home.  PERIOD!  Plain & simple facts!
3. They are a BAD investment.
   • Now this is an interesting one.  I've been thinking about how to write a blog about this very topic.  Check back later, as I expect to blog about this in the future.  But the short version here - Many do not use the reverse mortgage specifically as an investment tool.  But, actually, if done correctly, this can not only be a tremendous help to the borrower, BUT it CAN be an great investment tool!  While what I am about to say and describe may not be feasible in all states, more than likely it would be - Lets say the home is worth $150K, they have a $40K existing mortgage paying $400/month.  And they have $1200/month income in pensions & SS.  So for disposable income, they really have $800/month.  Not a lot to cover food, electric, medicines (remember older - many more dollars here!!) & health care, telephone, taxes, etc.  Let's say they are 75 years old, qualify for $100K reverse mortgage, pay-off the existing mortgage, and have $50K left after closing costs, and any other up front payments.  Now this is where most stop, and just having the full $1200 to spend on these same expenditures is a tremendous help - lets take this 'investment' aspect one step further - they get $100K life insurance policy & they are in good health - and that costs $100 a month (I have no clue what it would cost any CFP's out there that can give better estimate??) so now they do have a reduced income to $1100 a month, BUT the family can pay off the loan when they die, or take the money, sell the home and get the remaining equity, or however they want to work it.  This also is not taxed as life insurance does not incur inheritance taxes (In FL anyway)  So I think you get my drift here! 
4. You'll run out of money/equity in the home with a reverse mortgage as opposed to regular mortgage.
   • If you do run out of equity with a reverse mortgage, you still REMAIN in your home as long as your health permits.  PERIOD.  As long as you pay your taxes and homeowners insurance (and even on fixed income, virtually all seniors can do AT LEAST this!) you remain in your home no matter the balance.  With a regular mortgage (which you must meet income & credit qualifications - not required for reverse mortgage) it is MUCH more conceivable that you could lose a home to foreclosure if you are having troubles making the payments on the home.  With a reverse mortgage foreclosure is not impossible (see another blog: So, how many Reverse Mortgages are being forclosed upon?) but VERY unlikely to be foreclosed upon.  As long as taxes, homeowner insurance and condo/homeowners association fees are being paid, (about only reason for RM to be foreclosed upon) there is no other scenario that I can think of where you can have a reverse mortgage and be foreclosed upon.  Again, not impossible, but VERY unlikely!
5. Reverse Mortgages are not a part of the lifestyle business
   • How so VERY  wrong!  A reverse mortgage can improve a person's lifestyle TREMENDOUSLY!  While more are doing it to financially survive (which is an improvement in their lifestyle!) some do it to take vacations and do other things to improve their life as well.  I can't think of a better way to do it!
6. You'll leave nothing (including a home) for your heirs.
   • A lot of this was addressed in Point #3, but another thought.  Some heirs don't WANT the home.  Actually many do not.  They most often put it up for sale and get the remaining money back - a reverse mortgage is NO different, and if done like I mention in Point #3, you could actually inherit MORE money than just what is left from the home!
7. A reverse mortgage doesn't add anything to the bottom line (financial) and is only a false sense of financial security.  It is bad financial planning for all but a few.
   • Talk to those that have got a RM over the last few years.  It has been a tremendous financial help to MANY over the last few years! I have a friend of the family (and many others that I have helped get a RM as well over the last several years) that one Christmas or Thanksgiving dinner we started discussing reverse mortgages (I didn't even know he had one at that point in time) and HE started mentioning how it was such a big lifesaver, and has been such a big benefit, and all the ways it benefited him financially as well as in general lifestyle - nothing more needed to be said - I knew EXACTLY what he was talking about!  If you learn more about reverse mortgages (today's not years ago!) you will understand more about how they REALLY work! 
8. Reverse Mortgages have contributed to our current mortgage mess.
   • How?  Foreclosures?  Rarely foreclosed upon - PERIOD.  Lower quality of life?  As I said, virtually ALWAYS improves quality of life - all incoming money goes to bills & sometimes enjoyment things as well.  FORWARD mortgages, poorly informed borrowers (BTW - ALL  FHA/HUD HECM reverse mortgages REQUIRE counseling PRIOR to getting a reverse mortgage!), sometimes predatory lenders, negligent underwriting and/or qualifications,  and many other people and things associated with FORWARD mortgages  have been at fault, NOT reverse mortgages!!  That is a FACT!

I just can't say it enough - LEARN THE CORRECT FACTS about today's FHA/HUD backed HECM reverse mortgages before you are so down and negative on them.  Their impact can be a tremendous positive in so many ways.  Although I agree as many have said, they are NOT for everyone, but for SOOOO many, they have a unbelievable positive effect on the borrowers life!

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