A reverse mortgage is basically taking money from the equity in your home. You take money in a lump sum or as a monthly payment. Hence the term reverse … payments go to you instead of from you.
When should you use this product? Rule #1: When you are as old as possible. Rule #2: When you have no other assets to live on.
Why when you are as old as possible? Because the formula for payout is based on remaining lifespan. Thus, the older you are, the higher the payout.
Why when you have on other assets? Because the equity in your home should be considered a reserve asset. Life often has unexpected expenses come upon us, especially when one ages with health related expenses emerging. Having reserve resources for these unexpected situations is just prudent planning.