Reverse mortgages can definitely help cash-strapped retirees generate extra money for living expenses. But there can be an expensive downside: They carry stiff fees, nearly three times as much as those on a traditional mortgage. Upfront fees can exceed 10% of the loan in some cases.
So while a reverse mortgage can generate cash, it's not necessarily the best or only way to do that. Because of the high upfront costs, a reverse mortgage is usually not a great option if you're borrowing a small amount or you plan to move in a few years. You might pay far less by taking out a home-equity line of credit. Or you may be able to generate more income by selling and moving to a less expensive place.
Bottom line: Make sure there aren't cheaper ways to get the money you need.