Many surveys and academic studies have reached the same conclusion: most older Americans would prefer to age in place in their own homes. Aging in Place has become the slogan of the reverse mortgage industry-there’s even a National Aging In Place Week in November.

Certainly no one would argue with the righteousness of helping seniors to age in the comfort and security of their own homes. There’s also a good public policy argument that providing long-term care to seniors in their homes and funding the costs via the reverse mortgage mechanism may be the only realistic way to deal with the looming long-term care burden of baby boom retirees.

But regardless of the high-level arguments for aging in place, individual borrowers must personally and honestly assess the liklihood of their being able to remain in their homes for several years. As previously noted, seven years should be considered the minimum time period for a reverse mortgage to be a cost-effective option. If this doesn’t seem likely, you may want to look at other options.

Consider the following points in your self-assesment:

• Is your health and the health of your spouse relatively good?
• If your health deteriorates, is there enough nearby support (children or
  relatives) to provide assistance so that you can continue living at home?
• What is your life expectancy? Your spouse’s? (See next section.)
• If one spouse dies, will the remaining spouse still wish to live in the
  house?
• Is your home too big for one or two people? Is downsizing a better
  option?
• Do you want to continue with the responsibilities and hassles of being a
  homeowner, particularly if the house is older and facing maintenance
  issues?
• Are you prepared to have your future financial flexibility limited?

Even if you don’t think you’ll be moving within seven years, you need to consider the impact that a reverse mortgage will have on limiting future options and financial flexibility.

The decision to take out a reverse mortgage is a decision to limit your future options in couple of ways. First, as noted, you will need to stay in the home long enough to spread the high closing costs out over time for the loan to be sensible. Second, depending on interest rates, home values and other factors, the rising debt of a HECM will eat into your home equity meaning that you won’t have this safety-net available in the future.

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A Few More Related Articles of Interest:

Is a Reverse Mortgage Right for Me? New Guide Available

Reverse Mortgages and Long Term Care (LTC)

Using a Reverse Mortgage to Get Out of Tight Spots

Americans Need a Reality Check About Their Retirements

LTC(i) - Long-Term Care (insurance)