A reverse mortgage is one option.

Ursula Thompson is a homeownership coordinator with the Mississippi Housing Partnership. She counsels seniors and others on all aspects of home ownership, as well as reverse-mortgage requirements.

“What you’re actually doing is putting your home up for collateral,” she said.

The home ownership coordinator said the loan against your home doesn’t have to be repaid as long as you live there, but there are stipulations.

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Is a Reverse Mortgage Right for You?

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Fewer people are getting reverse mortgages now because of the drop in home values, but many people who qualify (you must be at least 62) are sitting on a pile of equity.

Lewis and Barbara Arnold have seen the glamorized marketing of reverse mortgages.

“If you see the commercials, the commercials are (about) houses that are probably $500,000 or $600,000 houses, the people are dressed really nice - they got their gray hair all slicked down and they got nice are all that,” said Lewis Arnold.

But the Arnolds are just looking to pay off more than $65,000 in medical bills.

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Do your homework before getting a reverse mortgage

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Clingan took out a reverse mortgage from BancorpSouth, and though she declined to discuss actual figures, she appreciates the help with her budget.

“I don’t know what I’d do if I wasn’t receiving that money now,” she said. “I thought for sure I was going to have to give up something dear - and that was before I saw what gas was going to cost.”

With the shaky state of the economy - foreclosures were up 112 percent nationwide compared to a year ago, according to RealtyTrac, while consumer confidence is at a five-year low - many older homeowners are using home equity conversion mortgages, also called reverse mortgages, for income.

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Reverse mortgages steadily climb

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By taking on a reverse mortgage, borrowers aged 62 and older can cash in on the value of their home and avoid paying back the loan for as long as they live in the property. These types of mortgages help retirees lessen their expenses and increase their monthly cash flow. Borrowers can generally receive their reverse mortgage cash in either one lump-sum, a regular monthly cash advance or as a line of credit.

But while a reverse mortgage can offer much needed supplemental income for retirees, it has some expensive downsides. The greatest risk is perhaps the upfront fees that are involved. For example you could give back 7% to 10% of your withdrawal in the form of fees. Borrowers don’t pay this out of pocket, but it does come out of the proceeds.

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Reverse Mortgages 101

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A house increasingly is more than a roof over the head for aging Sonoma County residents - it is a tool for financing retirement.

A growing number of retirees are tapping equity in their homes by taking out reverse mortgages. These loans, created solely for homeowners 62 or older, never have to be repaid as long as the borrower lives in their home.

Most use reverse mortgages to pay off their existing loans, wiping out their monthly mortgage payment. Others use them to draw a steady stream of cash out of their homes every month, supplementing other sources of income.

“It’s become more of a mainstream financial tool. Reverse mortgages are becoming a household word,” said Bronwyn Belling, who manages an education project on reverse mortgages for AARP.

But these mortgages are not for everyone. They are far more costly than home equity loans. There also could be benefits to selling and moving to a less expensive home.

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Tapping into equity

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The first time Matt Pitters — who works for Melville-based World Alliance Financial Corp. — called Flora Bartley of Temple, Texas, last month, she hung up on him. He allowed that this isn’t an unusual response to telephone sales calls, but said protocol required that he give it another try — just to make sure the hang-up was intentional.

The second time he called, Pitters said, “She was kind of mumbly and hard to understand, but she did say, ‘Help me,’ and that’s not normal.”

Keeping the potential reverse-mortgage borrower on the line, Pitters called local emergency responders and gave them Bartley’s address.

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Mortgage loan officer makes life-saving call

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I live in the Bay Area and have seen first-hand the excellent work Van Jones has been doing around clean energy. He is a major force in the Apollo Alliance as well as the new group Green For All.

Another person who could be a major player in clean technology could be Congressman Barney Frank as chair of the Financial Services Committee. He could develop a financing tool for investing in clean energy. I personally believe that a reverse mortgage could serve as a model for solar investment (see cleanenergyrm.org).

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Use reverse mortgages for clean power [Opinion]

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Question: My aunt is in a similar position as the 91-year-old woman with an oceanfront house in Southern California. It was suggested to us that she use a reverse mortgage. What are the cons to a reverse mortgage?

Answer: There are a couple that come to mind. For one thing, the fees are expensive, not just to originate the loan but also to administer it. But they are coming down as competition among lenders heats up.

For another thing, a few scam artists seem to have found the sector and are pushing inappropriate loans on unsuspecting borrowers. But that, too, shall pass as the businesses’ standard bearers work to weed out the rascals who foisted so many subprime loans on the masses.

Still, with some 40 million Americans already 62 years of age or older, and with 79 million Baby Boomers heading into the senior years, the potential for reverse mortgages is bright. “This is a vastly underserved market,” says Bart Johnson, co-chair of the National Reverse Mortgage Lenders Association. “The unmet needs are huge.”

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Reverse mortgages getting better

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Reverse mortgages are a somewhat popular way for the elderly to make use of the equity in their homes. Many times bankers who they have always dealt with are eager to assist their elderly clients in obtaining the use of the equity in their home. If they do take this route, they argue, that senior should be able to earn more money on the cash, if it is properly invested, than the home as it may appreciate.

Just what is a reverse mortgage?

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Is your home a good safety net for you when you are older?

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In 2002 the percentage of homeownership in Minnesota was 77 percent, the highest in America, and the highest in history. With a red-hot real estate market, the mortgage industry was spending hundreds of millions of dollars nationwide in lobbying and political contributions to spur the market even more. Their rally cry was not unheeded.

President Bush proclaimed America as “the Ownership Society,” embracing homeownership as a key to national security: “… if you own something, you have a vital stake in the future of our country.” He announced new programs for down payment assistance, tax credits for affordable homes and increased education programs. Most important, he pledged to increase the investment of government-sponsored enterprises like Fannie Mae and Freddie Mac in the secondary mortgage market by almost a half-trillion dollars. He also challenged the mortgage industry to free up more capital for more lending.

Taking his cue from the president, then-Federal Reserve Chairman Alan Greenspan criticized the prevalence of fixed-rate mortgages. He urged the mortgage industry to come up with more “innovative” projects and suggested that more American consumers should take out adjustable-rate mortgages (ARMs).

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Suitable for some, a bad deal for others — borrower, beware

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