The Census Bureau reports that there are nearly 40 million senior citizens in the US and at least 23 million households with senior citizens. More than 80 percent of this group owns their home. Using very conservative estimates, there are at least 16 million homes owned by senior citizens.

In 2012, the Federal Housing Administration estimates that about 71,000 FHA-backed reverse mortgage loans will be made. The estimated number of loans completed in 2011 was 74,000. Reverse mortgages can ease the financial stress of retirement and offer many benefits. The low number of loans could be due to a lack of knowledge about reverse mortgages.

The basics of the reverse mortgage

Reverse mortgages convert home equity into tax-free funds that can be used for any purpose. An unfortunate reality of retirement is that many retirees struggle to pay their bills – the Census Bureau also reports that the median household income of households with householders 65 and older is $31,354 a year, less than two-thirds the median for all households in the US, which was $49,777 in 2009 (the latest year data was available). A reverse mortgage could make it easier for many senior citizens to meet their everyday living expenses.

The proceeds from a reverse mortgage could also be used to fund a retirement dream. Despite the tragedy of the cruise line accident in Italy, cruises will remain a popular vacation. The expenses of a long-awaited dream vacation could be paid for with the equity that is sitting unused in your home.

Medical expenses are often unavoidable and can be overwhelming, even for those with insurance plans that cover most of the cost. Reverse mortgages could be a source of readily available emergency cash and that could ease some of the financial stress of retirees.

A terrible housing market is a great opportunity to take advantage of a reverse mortgage

With the real estate market sitting near multi-year lows in many parts of the country, a home can be difficult to sell. Reverse mortgages allow homeowners who are at least 62 years old to access the equity in their home without having to sell into a down market.

The loan is repaid when the home owner leaves the home, and the home owner could stay in their home for the rest of their lives without ever having to make a single re-payment on the loan.

There are many other benefits. Reverse mortgages may not be right for every home owner, but it does seem that they could benefit far more than the few thousand that are estimated to be using one of these loans this year. Legacy Reverse Mortgage offers education so that home owners can decide if this is the best tool for them. The education should probably be considered by all home owners.