Excerpted from Real Estate for Boomers and Beyond
by Tom Kelly

Picture a fast-talking salesman who never had a bad day. Shiny polyester suit, white shoes, all smiles and "yes ma'ams". He'd swindle your grandmother, take all of her money, and laugh all the way to the bank. For years, that was the reputation of anyone involved with the reverse mortgage industry. The loans were seen as evil, a windfall for any lender underwriting them, and a killer of family estates.

Today's reverse mortgages have been spiffed up and the rough edges filed. The most popular program is even insured by the federal government. While a few of the older loans giving lenders an "equity share" of the home's appreciation are still in place and causing irritation, the reverse mortgage now can be a viable option for persons over 62 who find themselves with significant equity in their home and little outside income. In this chapter, we explore the versatility and costs of reverse mortgages, and how they will continue to fit into the financial possibilities of an aging population.

Reverse mortgages can be used for any reason, including paying for health care and home modifications, travel, real estate purchases, automobiles, or college education. Consumers can choose how to receive the money from a reverse mortgage. The options include fixed monthly payments, a line of credit, a lump sum, or a combination of the above. The most popular option, which is chosen by more than 60 percent of borrowers, is a small lump sum combined with a line of credit that allow the consumer to draw on the loan proceeds at any time. The size of the reverse mortgage depends on age at application, the loan type, home value, and "sometimes" location. In general, the older the consumer and the more valuable the home (and the less amount owed), the larger the reverse mortgage.

Read more about second home investment strategies in Tom Kelly's book Real Estate for Boomers and Beyond.

Tom Kelly is a real estate columnist and radio show host with 33 years of experience as a professional journalist. Tom also authored five books focusing on second homes, mortgage options and retirement possibilities. He targets Baby Boomers and Retirees, providing consumer tips and helpful hints as well as explaining concepts and terms in a friendly, understandable style. His award-winning and nationally syndicated radio show "Real Estate Today" provides on-air advice to callers. Learn more about Tom.