Ask the Expert: Reverse mortgages

I'm 68 years old. Two years ago, I was partially disabled in a workplace accident. I completed training to find new work and I've sent out my resume every week for over a year. I can't live on Social Security alone. I own a house in Nassau County, but my savings are gone and I'm having trouble paying my bills. What's next? 

You sound like a candidate for a reverse mortgage -- a loan available only to people 62 and older. Your eligibility is based on your age, the value of the house and where you live, not on your income or credit score. You must use part of the loan to pay off outstanding liens, like your current mortgage. You can take the rest in a lump sum or as a line of credit or in monthly payments. (They aren't taxable, since this is a loan.)

Today, at 68, you could borrow about $208,000 on a $320,000 house in Nassau County, says Mike Temares, a reverse mortgage counselor at Nassau County Family and Children's Association.

The cost is about $17,000, included in the loan. Unless you stop paying taxes, no mortgage payment is due until you move, die or sell the house. Then the bank gets back principal and interest. But you never owe more than the selling price of the house. If it sells for less than your loan, federal insurance pays the difference.

Given the drop in real estate prices, existing reverse mortgages will cost the government a lot of money. Temares thinks rules for federally insured mortgages are likely to tighten very soon. His advice: If you're interested, get started now. Call 516-485-5600 to speak with a reverse mortgage counselor. Ask for extension 225.

The bottom line. Reverse mortgages can provide income for people who are house-rich and cash-poor.

Websites with more information.  Click here to find out more at  www.ftc.gov/bcp/edu/pubs/consumer/homes/rea13.shtm

Click here to read more at portal.hud.gov/hudportal/HUD?src=/program_offices/housing/sfh/hecm/rmtopten