Check out pitfalls before taking out reverse mortgage

We've all seen them, a distinguished pitchman -- perhaps a former U.S. Senator and television actor -- urging seniors to cash in on the value of their homes in order to have a comfortable retirement, or maybe even splurge a little.

It's a definite option for someone whose short of cash but does own their home.

But there are pitfalls the pitchman doesn't tell you about, and cautionary tales that might make a reverse mortgage a choice of last resort instead of an attractive option.

Reverse mortgages may be great while you and your spouse are able to stay in your home, but things can go south quickly if one or both of you need to go into a nursing home or for your heirs after you die.

Federal rules are supposed to give survivors the option to settle the loan -- and don't forget, that's what a reverse mortgage is -- for a percentage of the full amount.

Those rules haven't kept many reverse mortgage companies from threatening to foreclose unless heirs pay the mortgages in full.

Some move to foreclose just weeks after the borrower dies, and other heirs say getting lenders to provide details on how to keep the family home is as difficult as finding a missing airliner.

If you do have to move out of the home into assisted living or a nursing home, the mortgage becomes due, adding the expense of paying it off to the cost of the new care.

If a non-borrowing family member remains in that home when the elder moves into a care facility, the loan is still due, and the "tenants" have to move when the elder does.

If you fail to pay property taxes, keep up insurance or maintain the home, you are in default and the lender can foreclose, buy the property at a cheap price and perhaps even flip it for a good profit.

It's possible that principal and interest owed might exceed the value of the home, leaving your heirs to pay the debt or let the home fall into foreclosure.

And there are numerous other scenarios that could leave a borrower in default, foreclosure and in a nursing home and Medicaid at best, or destitute and homeless at worst.

If you or your elderly parents are tempted to take out a reverse mortgage, check with a competent financial planner and elderly law attorney first.