Do Reverse Mortgages have any dangers?

My Senior Citizen parents live far from me and they are unable to pay off their Credit Card debt of 8,000 dollars. My dad worked all his life as a auto body repairman from his garage on the property. He had a stroke a few years ago and can't work as well. Now his knees are going out. Mom is 63 and cannot find a job. Medicare and Social security is all they have and the Credit Card interest makes paying off the debt seem impossible. Since their home is paid for would a Reverse Mortgage get them out of this without any risk? Thanks

Many seniors are taking the reverse mortgage route. There are some pitfalls, especially if you start with a large dip into the available funding. But you must know that they will barely be able to make it on just social security income. Inflation has been rampant in the last few years and hardly seems to be reflected in the COLA on the social security. Food prices are the latest pinch for seniors because of the cost of trucking the food in.

If you start with a large amount on the mortgage tab, you reduce the time where the house is actually still in the black. This makes it important that your parents work with the mortgage company to find an optimum contract that will allow them to start with a smaller outlay in the early years yet be able to increase it later with inflationary increases... but not automatically, your parents need to decide yearly how much they need based on the current outlay and expense levels.

It is strange, but about five years after going on a fixed income, suddenly your parents will realize that they need to maintain their home and it takes more money than they have coming in. Or there is a sudden dental problem that in today's world can cost thousands. These are just a couple of examples of why your parents need a nest egg during these mortgage years so they can pay for things that are immediate and necessary. That is why I would make sure they had $3-5,000 available in a CD or savings account at the bank. It should be earmarked and difficult to just go take some out so they won't use it for daily expenses. Then each year they should review the government COLA rates and see if they agree based on their outlays during the year. They can judge whether to take the COLA or not. If they have a few years where they didn't take it, the best contract would allow them to take what they have not already taken in COLA. Anything more would probably not sit well with the mortgage company... out of fear that your parents will get more than it is worth even with inflation.

Perhaps the best situation would be to find them a retirement home where they can "buy in". Their social security would provide their food and utilities. The retirement apartment reverts back to the corporation when they die, but the corporation maintains the apartment... good news for any retiree.

If your parents are serious about a reverse mortgage (which, while I'm far too young to have used one myself, I have heard some horror stories about), what I would do is sit down with them and calculate out the math.
Figure out how much their home is worth, approximately, and from there estimate how much they'd be borrowing, and what that would come to every month. The real trick is to determine how many years they'll be earning that money before it stops coming every month, and whether that will likely be enough time. I realize that that's a somewhat morbid conversation, but you may decide that 15 years (or whatever it is) is simply not long enough. Or you may decide that after that amount of time you could help them out with extra money or whatever, but the bottom line is that you need to know exactly how all the math breaks down.
Best of luck,