In contrast to the past, when reverse mortgages were given to borrowers based solely on the equity in their home, applicants now must undergo a financial assessment. This basically takes a look at your credit history and other sources of cash to make sure you can meet the provisions of the law.
U.S. Census Bureau data shows that more than 25 million homeowners are age 62 or older. Yet according to the National Reverse Mortgage Lenders Association, the number of senior households currently using a reverse mortgage stands at about 620,000.
But exploring the use of a reverse mortgage cautiously is not a bad thing. Financial experts emphasize that it should be viewed in relation to the rest of your financial plan.
"For underfunded people [who are barely making ends meet], it might be their last resort," Davison said. "But for most retirees, it is only one part of their financial picture."
― By Sarah O'Brien, special to CNBC.com