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This is part 4 and the last post of this series.

Perhaps the senior is making ends meet, but would be borrowing on their credit cards, or from their kids, or depleting precious savings for other significant expenses such as home repairs or medical bills. In that case, a reverse mortgage home equity line of credit would provide the financial security of knowing that the funds are there when they are needed. Remember that with reverse mortgage line of credit, the money simply sits in home equity and does not begin accruing interest until it is used. Once a draw is made, there is no burden of payments or risk of rising interest rates pushing the payments sky-high as with a traditional home equity line of credit.

On the other end of the spectrum are the well-off and financially savvy. Their investment portfolios perform well and provide all the income that they need. These seniors know the power of leveraged investments and compounding returns. They might take out a reverse mortgage and invest the money where they know that they can get a rate of return that is greater than the interest rate on the reverse mortgage. Borrowing money at 6% to get a return of 8% or more makes sense every time.

The wealthy use the reverse mortgage as a prudent estate planning tool. By accessing their home equity, they are able to begin transferring more of their wealth to their heirs. Such a strategy gives them direct control over how their money is distributed, allows them to enjoy the giving process, and can dramatically reduce the estate tax burden.

A reverse mortgage should be considered by all homeowners over age 62. While not for everyone, it is a powerful financial tool that should not be dismissed without understanding how it could apply to each senior’s individual situation.

This is the third post in a series.

Now let's look at a few of the situations where the reverse mortgage makes perfect sense. Clearly, if the senior could benefit from extra monthly cash flow in any way, the reverse mortgage is a potentially good option. AARP reports that 44% of people over age 60 have saved less than $75,000 for retirement and cite social security as their primary source of income. Fortunately, these numbers exclude home equity. With life expectancy much greater today than 20 years ago, it is evident that many seniors simply do not have enough money to fund their lengthy golden years. For them, the cash flow or a home-equity line of credit "nest-egg" from a reverse mortgage could be a great thing.

In many cases, health and related expenses become an issue. Some seniors have had many relatively care-free years, depending on their social security income and a little savings to cover their bills. But recently medical issues have started cropping up and as time marches on, the potential of more problems only increases. The senior might try applying for long term care insurance, but find that the opportunity passed back when they were 50 years old and healthy. Now the prospects of paying for proper medical care (even the deductibles), in-home care, and prescription drugs are daunting. The smart and prudent move would be to plan ahead and obtain the reverse mortgage in order to be financially prepared.

As a lump sum, the senior could use the reverse mortgage to pay off an existing mortgage, and increase their monthly cash flow by hundreds, or even thousands of dollars each month. Or they could use it to pay for home upgrades to improve the accessibility and mobility in the home. Some have even used the lump sum to purchase a second vacation home! There are a million uses for additional funds.

This is a continuation of yesterday’s post.

I have seen some unfortunate cases where the senior has a clear need and would benefit to benefit from a reverse mortgage, but is convinced by their heirs not to do it. The heirs realize that it will allow their senior parents to use some of the home equity that they are waiting to get as an inheritance. The heirs would prefer that mom or dad live at, or below, the poverty line - or just not enjoy their retirement - so that there is more money for them in the future. Fortunately, such greedy heirs are in the minority. Most truly have their parents' well-being and quality of life in mind.

Some seniors rule out the reverse mortgage because their home is in need of major repairs. They think that lenders would be unwilling to give them the money based upon the condition of their home. In most cases, even major repairs are not a problem. Your reverse mortgage lender simply obtains professional estimates and sets aside money from the reverse mortgage so that the necessary repairs can be made after the reverse mortgage is obtained. That way, the senior does not have to come up with the money to repair their home, but can use the reverse mortgage proceeds to pay the contractor bills.

Other seniors do not think that they qualify for a reverse mortgage because one spouse is younger than 62 years of age. They have been told that both homeowners must be over the age of 62 in order to get a reverse mortgage. But they are not aware that there are perfectly good ways to solve even this issue. Watch this blog for future posts on this subject or contact a competent reverse mortgage lender and ask them to explain how this is done.

The following are today’s reverse mortgage interest rates for the most popular reverse mortgage products:

HECM Reverse Mortgage rate: 2.85% (Index is the 1 Year CMT at 1.35% plus a margin of 1.5%)

Fixed rate Reverse Mortgage - HECM: 5.79% to 6.81% (depending on the lender)

Independence Plan 360 jumbo reverse mortgage: 6.13938% (Index is the 6 month LIBOR at 2.53938 plus a margin of 3.6%)

Independence Plan 210 jumbo reverse mortgage: 4.63938% (Index is 6 month LIBOR at 2.53938 plus a margin of 2.10%)

Cash Account Advantage jumbo reverse mortgage: 6.040% (Index is 6 month LIBOR at 2.54% [rounded] plus margin of 3.5%)

Interest rates are not an APR and do not account for closing costs, click here for a Reverse Mortgage Quote