Is a reverse mortgage a smart move?

Actor Tom Selleck has joined the list of celebrities appearing in TV commercials selling reverse mortgages.

The onetime "Magnum, P.I." actor's elevator pitch for reverse mortgage lender American Advisors Group sounds appealing: Use one of the most valuable assets you own — in this case, your house — to generate cash in retirement.

Some financial advisors say it's a tempting strategy but may not be right for everyone.

"Historically, reverse mortgages have been taken out for income needs and that can be very dangerous," said certified financial planner Joe Morgan, principal of JMW Wealth Management. "You might feel like you have this endless pot of money and not realize you're putting your housing situation at risk."

Reverse mortgages allow people age 62 and older to tap into equity built up in their primary residence while still continuing to live there.

The total amount you're able to borrow depends on your age, interest rates and the home's value. You can take the cash in a lump sum, in monthly payments or as a line of credit.

If this still sounds like a good deal, here's some of the fine print:

• You are still responsible for property taxes, insurance and maintenance.
  

• Interest is added monthly to the loan, meaning the amount you owe gets bigger every month.

• As soon as you or your spouse decide to sell the property or move out, or pass away, the loan has to be repaid, which can leave you and your family with far less money in your pocket.

So, who should consider these types of loans?

According to Morgan, prime candidates are people who have paid off first mortgages before retirement, like where they live and want to stay there but don't have enough resources to cover everything that may happen.

Morgan advises clients who take out reverse mortgages to choose the line of credit option over a lump sum or monthly payment, using it only when needed to cover unexpected emergencies.

"This can be a great way to defend against future unknown long-term care costs with relatively little out-of-pocket expenses," he said.

But before you borrow, talk to a federally approved housing counselor who specializes in reverse mortgages. Find one by visiting the U.S. Department of Housing and Urban Development website or call (800) 569-4287. Your counselor can help you compare quotes from various lenders and provide other information.