Only you can decide what a reverse mortgage is worth
to you. It probably depends most on what you would use
one for: increasing your monthly income, having a cash
reserve (creditline account) for irregular or unexpected
expenses, paying off debt that requires monthly repay-
ments, repairing or improving your home, getting the
services you need to remain independent, or generally
improving the quality of your life.

It may be helpful in evaluating the worth of a reverse
mortgage to consider a major alternative: selling your
home and moving. Do you have any idea

Seeing your housing alternatives first-hand and in-person
may help you decide about a reverse mortgage.

Either way, looking will give you a much better idea of
the overall costs and benefits of staying versus moving.
That will give you a better sense of what's valuable to you.
And make it easier to evaluate the cost of a reverse mortgage.

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What about public benefits?

Social Security and Medicare benefits are not affected
by reverse mortgages. But Supplemental Security Income
(SSI) and Medicaid are different. In general, these
programs count loan advances differently than annuity
advances.

• Loan advances generally do not affect your benefits
  if you spend them during the calendar month in which
  you get them. But if you keep an advance past the
  end of the calendar month (in a checking or savings
  account, for example), then it will count as a "liquid
  asset." If your total liquid assets at the end of any
  month are greater than $2,000 for a single person or
  $3,000 for a couple, you could lose your eligibility.
  ("Reverse Mortgages: A Lawyer's Guide," American
  Bar Association 1997.)
• Annuity advances reduce SSI benefits dollar-for-dollar,
  and can make you ineligible for Medicaid. So if you
  are considering an annuity, and if you are now receiving
  - or expect someday you may qualify for - SSI or Medicaid,
  check with the SSI, Medicaid, and other program offices
  in your community. Get specific details on how annuity
  income would affect these benefits. ("Reverse Mortgages:
  A Lawyer's Guide," American Bar Association 1997.)

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What about taxes?

An American Bar Association guide to reverse mortgages
advises that generally

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What about "borrowing"?

Many of us have been well served by these borrowing
cautions:

-> don't borrow in general

-> don't borrow against your home in particular

• "Don't Borrow" Borrowing usually means using
  money you haven't earned yet. You borrow today
  in the hope that you will be able to earn enough
  in the future to repay it. So you are borrowing
  against your uncertain future earnings - which
  sounds like "counting your chickens before they
  hatch." That's generally not a good idea unless
  you have a steady job and good prospects.

But this caution doesn't really apply to reverse
mortgages because you are not borrowing
against future income. In fact, you are borrowing
against home equity that you have already earned.
So you aren't counting your chickens before they
hatch. You are hatching the nest egg you've already
earned.

• "Not Against Your Home" Borrowing against
  your home usually means paying back a loan every
  month. But if you lose your job or your income drops,
  you could miss some payments and lose your home
  to foreclosure. That's why it's generally not a good
  idea to borrow against your home unless it's for a
  very basic purpose. You want avoid jeopardizing
  your home ownership.

But this caution doesn't apply to reverse mortgages
either, because no monthly repayment is required.
You can't lose your home by missing a payment
because there are none to make.

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What about "spending"?

Many of us have also been well served by these spending
cautions: "You don't know how much you will need and how
long you will live. So don't spend your savings. Wait till you
really need them."

Makes a lot of sense. But - if you literally followed these
cautions forever, you would never use any of the money
you spend a lifetime building up. And that doesn't make
much sense. Why go to the trouble of earning it and saving
it if you're never going to use any of it? So in retirement,
this spending caution should be amended:

As amended, this caution clearly does apply to reverse
mortgages. Because the more home equity "savings"
you use now, the less you'll have later. So the questions
now become:

• If you ever do take a reverse mortgage, should you
  do it now or wait until later to decide? (In the future,
  you may be eligible for more cash because you will
  be older and your home may be worth more. On the
  other hand, interest rates may be higher, and that
  would decrease the amount otherwise available.)
• If you take one now, how should you take it: creditline,
  monthly, or a combination? If you take a creditline,
  how much of it should you use now versus later? If
  you take a monthly advance, should you select a
  specific number of years, for as long as you live in
  your home, or should you buy an annuity providing
  lifetime advances no matter where you live?

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What about "investing"?

Should you take a lump sum of cash from a reverse
mortgage and invest it someplace? Except for purchasing
an annuity from a highly-rated company, that's generally
a lousy idea - unless, of course, you can afford to lose
money.

Remember, to come out ahead on any investment, you'd
have to earn a greater rate of return on it than the TALC
rate you are paying on the reverse mortgage. And the
odds against doing that safely are mighty long.

A much better alternative is to take a HECM creditline.
You only get charged interest on the cash advances
you've actually taken, and the remaining available credit
grows larger every month. And this growth is not an
"interest" earning, so you are not taxed on it.