Dreaming about a golden retirement?

Reverse mortgages (also called home equity conversion loans) enable elderly homeowners to tap into their equity without selling their home. The lender pays you money based on the equity you've accrued in your home; you receive a lump sum, a monthly payment or a line of credit. Repayment is not necessary until the borrower sells the property, moves into a retirement community or passes away. When you sell your home or no longer use it as your primary residence, you or your estate must repay the cash you received from the reverse mortgage plus interest and other finance charges to the lender.

Most reverse mortgages require you be at least 62 years of age, have a low or zero balance owed against your home and maintain the property as your principal residence.

Reverse mortgages are ideal for homeowners who are retired or no longer working and need to supplement their income. Interest rates can be fixed or adjustable and the money is nontaxable and does not interfere with Social Security or Medicare benefits. Your lender cannot take property away if you outlive your loan nor can you be forced to sell your home to pay off your loan even if the loan balance grows to exceed property value.

What makes it a "reverse" mortgage?

A reverse mortgage is exactly what its name implies — a loan whose features make it essentially the reverse of a traditional "forward" mortgage. Instead of paying your lender, your lender pays you.

Having spent years paying for your home now let your home PAY you. However you plan to use your equity — whether traveling, paying medical expenses, improving your home, or just adding a bit of cushion to your monthly budget — you'll have a golden opportunity to so.

What happens to my home?

Nothing happens to your home — you remain the owner for as long as you live there, and you will never be forced to move. If you decide to sell or move from your home, the outstanding balance of your reverse mortgage will become due, just as it would with a traditional mortgage.

Who is eligible?

All owners listed on the home's title must be at least 62 years of age and occupy the home as their principal residence.

Speaking with an approved reverse mortgage counselor is another important eligibility requirement. The Department of Housing and Urban Development (HUD) supervises counseling agencies that can work with you in person or, more commonly, over the phone. Your reverse mortgage consultant can provide you with a list of authorized counselors.

Remember the Four Nevers. With a reverse mortgage, the borrower will

• Never make monthly payments
• Never relinquish title or ownership of home
• Never owe more than the value of the home
• Never have any restrictions on how the tax free proceeds are used