A reverse mortgage can be an excellent solution for a homeowner who has a lot of equity in their home but requires cash. Contrary to what some believe, engaging in a reverse mortgage does not need the homeowner to immediately relinquish the title of the property. During a reverse mortgage the homeowner still owns their home, there is simply a lien placed against the property by the reverse mortgage lender. Once the homeowner is no longer living in the home, then the home will be transferred to the lender.

The reverse mortgage lender gives the homeowner a certain amount of money in exchange for this lien. While the homeowner continues to live in the home, this money does not need to be paid back. The amount of money that can be loaned is highly regulated by the government and is based both on the home's value and the age of the borrower. Reverse mortgages are intended for use by the elderly to help them with fixed-income situations.

Reverse mortgages have some benefits. The amount loaned to the homeowner is not taxed and it does not have any impact on existing government benefits. However, there are also some drawbacks. Usually with a reverse mortgage the homeowner does not get the total market value of their home. This is because there is also loan interest calculated into the price of the loan from the beginning. 

A reverse mortgage is usually used by an elderly homeowner who needs cash and owns their home completely. It's an easy way to get money for their home without having to sell it immediately, because selling it immediately might leave them without a place to stay. However, a reverse mortgage should usually be discussed with multiple lending institutions for the best rates. This is because a reverse mortgage usually will not give the homeowner what the house is truly worth, and the terms of the reverse mortgage can vary a lot from lender to lender.

For many seniors, a reverse mortgage is truly the only option. Selling is often not an option unless family members are willing to take the senior in. Home equity loans are not a reliable way to subsidize a senior's monthly income because it comes in a lump sum and then requires monthly repayment. Finally, renting out a room is unpredictable and sometimes even dangerous, and trying to find extra sources of income is usually impossible for the elderly. A reverse mortgage allows a senior to benefit from the value of their home without having to sell it immediately. In turn, the senior will not get the same amount they would get if they sold the property outright.