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value instead of the normal 0.5 percent. (Note: Credit card debt isn't considered a mandatory obligation, so those with significant credit card debt may not be able to withdraw enough to pay off their debt.)
• Generally, borrowers can take the money either as a lump sum at closing (with a fixed-rate loan), or as an ongoing line of credit or monthly payments (adjustable rate loan). However, lump-sum payments are now subject to the 60 percent mandatory obligations test, so to withdraw more than that you'll have to go the line-of-credit route, at least for the first year; after that, you can tap the remaining balance if you wish.
• Under previous rules, almost anyone with sizeable home equity could take out a reverse mortgage. Now, potential borrowers must undergo a detailed financial as

sessment to ensure they'll be able to meet future tax and insurance obligations.
• Lenders are required to review the borrower's credit history. They also must analyze all income from earnings, pensions, IRAs, 401(k) plans or Social Security, and weigh it against the borrower's likely living expenses, including other outstanding debts. Those who come up short (i.e., are more likely to default) may be required to set aside money from their reverse mortgage to cover future obligations - thereby lowering the amount of equity they'd be able to tap.
• The new regulations also reduce the maximum amount of home equity that can be borrowed against - 10 to 15 percent less than before, on average. Generally, the older you are, the more equity you have and the lower the interest rate, the more you'll be able to borrow. Note: The age component of this calculation is based on the youngest party listed on the loan.
• Because reverse mortgages are so complicated, potential borrowers are required to consult an HUD-approved counselor before being allowed to apply. Do preliminary research at helpful sites sponsored by HUD (www.hud.gov), the Consumer Financial Protection Bureau (www.cfpb.gov) and AARP (www.aarp.org). Also check with an accountant, financial planner or lawyer specializing in elder law to make sure a reverse mortgage is right for you.
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• Jason Alderman directs Visa's financial education programs. To Follow Jason Alderman on Twitter: www.twitter.com/PracticalMoney
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