Reverse mortgages gain popularity among seniors

Due to the high cost of living, many seniors are finding themselves financially squeezed in their retirement. Some are forced to sell their homes and move to more affordable communities; others take out second mortgages with payments that just make matters worse.

Reverse mortgages can offer a way out.

The reverse mortgage is a home loan that enables seniors to convert part of their equity into taxfree income without having to sell their home, transfer title, or take on new mortgage payments. The loan is insured by the federal government and endorsed by many senior advocacy groups including the American Association of Retired Persons.

The loan amount varies depending on age and other factors. Today's maximum loan amounts range between $180,000 and $230,000.

Candidates for the loan are those 62 or older who have enough equity to qualify.

Repayment of the loan is triggered when the homeowner no longer occupies the property. At that time, the borrower or the borrower's heirs can refinance the loan or sell the property.

"There is an avalanche of interest in the reverse mortgage program as seniors are seeing it as a viable solution to bridge the gap between shrinking income and an increasing cost of living," said Ed Levy, a reverse mortgage specialist.

A big part of the mortgage cost is the FHA insurance that is required, but there are no monthly payments and no repayment of the loan is required until all the homeowners permanently vacate the home.

There are no income or credit qualifications to obtain the loan. Reverse mortgages have even been used to save homeowners from foreclosure.

The amount available for the loan is based on the age of the youngest homeowner and the home's value.

It is very important to know that homeowners can never be forced from their home as long as they live in it.

Steve Stewart is a senior mort- gage planner with United Pacific Mortgage. His e-mail address is sstewart@unitedpacificmortgage.com