Reverse mortgages have sometimes had a bad reputation, says Wade Pfau, professor of Retirement Income at American College and founder of retirementresearcher.com. But, he explains, they can be a useful source of income in retirement.
Read more: Should You Keep Your Home When You Retire?
You shouldn’t sign up for a reverse mortgage, Pfau says, unless you plan to live in your home for years and years. Otherwise, a reverse mortgage is not worth the hassle of setting up or the accompanying setup costs. You also shouldn’t get a reverse mortgage if you’re looking at it as a last resort, he says. You could lose your house if you don’t pay the property taxes. But if you’re able to keep current with your property taxes, the mortgage doesn’t have to be repaid until you move out of your house or die. In either case, the money doesn’t come out of your pocket; the reverse mortgage is paid off with the proceeds of the home sale.