When you should and shouldn't seek a reverse mortgage

Some seniors don't qualify for reverse mortgages. Either they are not old enough (minimum age is 62), or their home equity - the difference between the value of their homes and the balance of their existing standard mortgages - is too small.

But others should say no because reverse mortgages will be inconsistent with their other goals:

You want to leave a debt-free house to your estate. A reverse mortgage builds up debt. The beneficiaries of your estate must pay it off if they want the house.

You want those now living with you (spouse, companion, child) to be able to live in the house after you die. If they are not covered by the mortgage contract because they are too young or for other reasons, they'll have to leave the house.

Senior homeowners who might improve their lives by taking out reverse mortgages, also known as home equity conversion mortgages, include:

Those whose incomes drop upon retirement while their mortgage payments continue. Cash drawn under a reverse mortgage may allow them to pay off the old mortgage, eliminating the payment.

Those retiring before 65 who want to wait until that age to collect Social Security benefits because of the bigger checks they'll receive. Drawing a monthly payment under a reverse mortgage until age 65 can provide a temporary source of income.

Those living in retirement on a nest egg, or who plan to do so, who fear their money might run out. A reverse-mortgage credit line, allowed to grow untouched so long as it is not needed, provides protection.

Those seeking safeguards against a sudden drop in income, such as with termination of a pension after a spouse's death or because of a default by the entity providing the pension payment.

Those who want to become homeowners for the first time or move closer to family and who don't want a monthly payment or to deplete their financial assets.