Benefits

• Bankrate touts the personal finance information it publishes for consumers as "original and objective." For example, in an article titled "The Ins and Outs of Reverse Mortgages" the website draws attention to benefits of such loans, noting that borrowers usually don't have to repay reverse mortgages as long as they live in the home linked to the mortgage. Money received from the loan usually isn't taxed, and it doesn't affect Social Security or Medicare benefits. Still, Bankrate says reverse mortgages have downsides as well, which include high closing costs and fees.
  
  

Effects

• Newspapers have reported on how consumers say they're faring with reverse mortgages. For example, a New York Times article titled "Tapping Into Homes Can Be Pitfall for the Elderly" notes that some senior citizens have received significantly less cash from reverse mortgages than they expected. They blame salespeople for pressuring them to put the cash into investments that lost much of the money they borrowed. Yet the Times also reports that surveys indicate many borrowers say reverse mortgages have improved their living standards and provided money for retirement.
  
  

Types

• The U.S. Federal Trade Commission (FTC) serves as the nation's consumer protection agency, and it outlines different types of reverse mortgages on its website. The FTC notes that single-purpose reverse mortgages are the least expensive, but they're not offered by all lenders. They're loans that can only be used for one purpose, such as home repairs or improvements. The FTC also warns consumers about reverse-mortgage sales pitches intended to push borrowers to buy annuities or long-term-care insurance. Generally, consumers don't have to buy other financial products to get a reverse mortgage, and the FTC site says it's illegal to require such purchases in some cases.
  
  

Warning

• A Consumer Reports article on reverse mortgages titled "Reversal of Fortune" also warns people to be wary of sales pitches that focus on the benefits of reverse mortgages and not the high costs. Consumer Reports says the loans can be a bad decision for borrowers who don't understand how fast fees and interest charges can increase. As a result, some borrowers may use up all of their home equity with a reverse mortgage and have no other means for paying other expenses that arise in their retirement years.
  
  

Considerations

• A reverse mortgage may offer a tax advantage for some senior citizens. That's the focus of an article on the Smart Money website titled "A Tax-Skipping Move for Seniors." Some seniors may be leery of borrowing against their homes to increase their cash flow. Yet the article points out that seniors who sell their homes to get extra money can end up with a big tax bill. According to the article, reverse-mortgage fees and interest charges may be lower than paying taxes associated with selling an appreciated home to get extra cash.