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The reverse mortgage has traditionally been used by the elderly living on a fixed income who have most of their assets tied up in home equity. They draw against the home through the reverse mortgage to use it for living expenses. However, the reverse mortgage is now being used by the affluent homeowners as an investment tool.

Despite a softening housing market, mortgage brokers say homeowners are using them to tap into their equity to invest in stocks, upgrade their living quarters or simply pay expenses in lieu of dipping into their retirement accounts too heavily.
Federally insured reverse mortgages grew a stunning 77 percent in the fiscal year that ended Sept. 30 compared with fiscal 2005, according to the National Reverse Mortgage Lenders Association. That’s 76,351 home equity conversion mortgages, which are available to homeowners 62 and older.
But this may be one of those parties where it pays to arrive fashionably late. Industry growth and soaring home values have spawned several new players - particularly in the private jumbo-loan market, experts said.
As the name implies, a reverse mortgage is a loan that allows homeowners to use their equity to create a lump sum of cash, a stream of monthly payments, a line of credit, or some combination of all three. via the baltimoresun.com.

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