Although it is only used in about 1% of all mortgages, the reverse mortgage is becoming increasingly popular. A reverse mortgage allows owners of paid off homes to borrow against their homes equity. This can be done in a lump sum, line of credit or monthly payments. You must be 62 years of age to qualify. The loan is repaid when you die, move or sell your home.

It used to be recognized as a last resort when faced with things such as foreclosure, medical expenses, or to keep the home from despair. Now, however, many retirees use a reverse mortgage to make their retirement more enjoyable for themselves.

The increasing growth of the housing market in past years has left many homes with huge amounts of equity in their homes. Californians who bought their homes in the 60's who are now retiring, and many of them have home equity in the six figure range. Homeowners are using their equity to buy cars, boats, luxury vacations and even second homes. It allows some people to spend time at a vacation home but still own their home. Once they die, their primary home would be sold to pay off their reverse mortgage and their second home will become part of their estate.

This gives some couples who struggled to raise families and pay mortgages to enjoy their time as a retiree. They can take that cruise that they never could afford before, or take part in other luxurious things that they have a always wanted to do. 

Although it seems like a great idea, people in the lending industry think it is best to take caution when making the decision to get a reverse mortgage. For most people, their home equity is their largest asset. You have to think about other things which can occur, such as a lengthy stay in a hospital or nursing home. You have to consider what you will do to pay for this.

Although you should be cautious before deciding to buy anything luxurious with your reverse mortgage, it seems to be becoming more and more popular among retirees. It will probably continue to occur, with interest rates as low as they are.