If you, your parents or other seniors in your life are sitting on a big load of home equity while struggling to get by each month on a fixed income, listen up. The solution may be a Home Equity Conversion Mortgage, often referred to as a "reverse mortgage." As long as you own a home, are at least 62 years old and have sufficient equity, you can get a reverse mortgage. There are no special income or medical requirements.

A reverse mortgage enables older homeowners to convert part of the equity in their homes into tax-free income without having to sell the home, give up the title, or take on a new monthly mortgage payment. Instead of making monthly payments to a lender, as with a regular mortgage, a lender makes payments to you. The source of the money is the equity in your home. A reverse mortgage should be your last resort, not your first. Should it become your last resort, however, rejoice because it is a remarkable solution in the right situation.

To qualify, you must own your home free and clear of any mortgage or equity loans or owe so little that you are able to pay off all your debts at the closing of your new reverse mortgage.

Instead of your loan balance becoming smaller with each monthly payment, in a reverse mortgage the balance grows larger over time. Interest and principal accrue as the funds are used. Typically, the homeowner retains ownership of the property. A reverse mortgage does not require repayment for as long as you remain in the home, so there is no possibility of losing the property through foreclosure. A reverse mortgage is indeed a safe debt and highly desirable for my readers who rather would have access to their equity than leave it all to their heirs.

Another beautiful feature of a reverse mortgage is that the lender cannot require repayment from any asset other than the home. When the homeowner leaves the property, it is either sold or refinanced to repay the reverse mortgage.

There are drawbacks you should know about before considering a reverse mortgage. First of all, the fees are considerable, and for the most part, they are rolled into the loan.

Another thing you need to know is that by taking a reverse mortgage, you run the risk of using up your equity, leaving little, if any, value in the home as an inheritance to pass on to your heirs. Bottom line: A reverse mortgage allows you to live off your kids' inheritance. Be plenty grateful that you have that option.

As with all matters of financial consequence, you need to learn all you can about reverse mortgages before serious consideration. To learn more, read "Money from Home: A Guide to Understanding Reverse Mortgages," a free download at www.FannieMae.com/global/pdf/homebuyers/moneyfromhome.pdf, or call 1-800-732-6643 to receive a copy by mail. You also can find more information at www.ReverseMortgage.org.

Mary Hunt is the founder of DebtProofLiving.com and author of 17 books, including "Debt-Proof Living." You can e-mail her at mary@everydaycheapskate.com, or write to Everyday Cheapskate, P.O. Box 2135, Paramount, CA 90723. To find out more about Mary Hunt and read her past columns, please visit the Creators Syndicate Web page at www.creators.com.
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