For healthy and financially stable adults, reverse mortgages can be an effective retirement planning tool, writes syndicated columnist Scott Burns. 

Reverse mortgages have undergone a variety of program changes, reducing costs and limiting the amount of the loan a borrower could take out in the first year. Because of some of these changes, financial services companies are seeing the value in using reverse mortgages as a financial planning tool. 

But the loan hasn’t always been favored by critics. 

“Historically, reverse mortgages have had two major drawbacks,” says Burns, who has covered personal finance and investments for more than 30 years. “First, they were relatively expensive in closing costs, insurance cost and interest rate. Second, most of the people who took them out shouldn’t have.”

U.S. News & World Report recently advised against the use of reverse mortgages, saying, “It’s a colossally bad idea for a number of reasons.” 

Problems with reverse mortgages often came about as a result of the type of person borrowing them, Burns says. These people had no other assets, were in debt and needed to rethink their shelter needs rather than borrow. 

“The result was that borrowers would take out the maximum amount and then fail to make tax and insurance payments,” Burns writes. 

However, as program changes take effect, Burns says reverse mortgages are a viable option for some seniors. 

“If you are retired, healthy and not dead broke, new research indicates that a reverse mortgage can be what they were hoped to be — another tool for managing retirement income and spending,” he writes. 

Read the full column here. 

Written by Emily Study