If you take out a reverse mortgage and don’t use the funds available, can you use it as an investment?

The answer: Yes, if you take out a reverse mortgage and you don’t use the credit immediately, it will grow over time.

“The line of credit grows over time because the amount that you have to use is based on a time period, so that if you wait longer, you have access to more money,” says Marty Bell, senior vice president of marketing and communications at the National Reverse Mortgage Lenders Association.

A reverse mortgage is a financing tool that allows you to convert part of the equity in your home into cash without having to sell your home or pay additional monthly bills. In a reverse mortgage, you receive money from the lender, and generally don’t have to pay it back for as long as you live in your home. The loan is repaid when you die, sell your home, or when your home is no longer your primary residence. The proceeds of a reverse mortgage generally are tax-free, and many reverse mortgages have no income restrictions.

And if you don’t use the funds the pot may increase 3 to 4 percent per year. However, it is not interest that is increasing, it’s the value of your home, and since the line of credit is based on the value of your home, it will also increase.

“The idea behind the ‘growth rate on unused funds’ is to allow the borrowers access to future home value appreciation without having to refinance to gain access to it, since the home typically goes up in value,” says Earl Rose, vice president of mortgage lending and reverse mortgage specialist at mortgage broker Guaranteed Rate.

Some lenders make the case that, in conjunction with a two-bucket investment strategy, you could even use a reverse mortgage as a way of supplementing your retirement portfolio, should the stock market fail. A study from the Financial Planning Association shows that using a reverse mortgage can be a cost-effective risk management tool for retirement distributions.

“It’s a great standby tool for life’s little surprises that come up,” Bell says.

The bottom line is that you can take out a reverse mortgage as a line of credit, not use and see that line grow.