"If the one asset you have is your home, a reverse mortgage will let you turn it into a payment stream," Certner said. "Maybe you simply need a home-equity loan, or to sell the home and move to something smaller. For a lot of people who want to stay in their own homes, the reverse mortgage is one way to help accomplish that."
Though home values have dropped steeply since the real estate bubble burst in 2006, many older Americans have owned their houses for decades and have vast amounts of equity to tap into.
Yet of the millions of home loans originated between 1990 and 2010, just 660,000 were reverse mortgages, AARP says.
Why? Because reverse mortgages can be complicated, sometimes pricey affairs compared with the financial alternatives.
There are three kinds of reverse mortgages, but the lion's share - 95 percent - are Home Equity Conversion Mortgages insured by the Federal Housing Administration.
HECMs cost more than traditional mortgages. They have no income or medical requirements, and the cash can be used for any purpose, such as paying medical bills.
Currently, the national loan limit for an HECM is $625,500. How much you can borrow depends, among other factors, on your age, the appraised value of your home, and current interest rates.
The older you are, and the more equity you have in your house, the more you can borrow. Though 62 is the minimum age, many experts advise against reverse mortgages then - you may have a greater need to tap into your home equity later in life.
To qualify for HECMs, borrowers must own their properties outright or have small mortgage balances; occupy the properties as principal residences; and not be delinquent on any federal debts, such as income taxes.
Borrowers must participate in "consumer information sessions" provided by counselors approved by the Department of Housing and Urban Development. (These typically cost $125, Certner said.)
