Widow Reverse Mortgage

Q: I am a widow having a hard time making financial ends meet. My daughters keep telling me I am sitting on a ''cash cow,'' meaning my house. They keep telling me to get a reverse mortgage. But I recall you said reverse mortgages aren't always a good idea. If I take out a reverse mortgage, does the bank own my house?

A: To qualify for a senior citizen reverse mortgage, you must be at least 62 and own your house or condo. If you have a small mortgage, part of the reverse mortgage proceeds can be used to pay it off, so you won't have any more mortgage payments.

The reverse mortgage lender does not ''own'' your home. You do. But the reverse mortgage lender has a lien or security interest in it, just like a regular mortgage.

When you obtain a reverse mortgage, you have three choices: a lump sum (perhaps to install a new roof or to buy a new car), monthly lifetime income even if you live to 110, and/or a credit line to use when desired (except in Texas).

The reverse mortgage ''matures'' and must be paid off when you sell the house, move out for longer than 12 months, or die. After the sale of your home, the remaining equity goes to you or your heirs. If your heirs want to keep the house after you die, they can obtain a new mortgage to pay off the reverse mortgage.

The only time I don't recommend a reverse mortgage is if you don't plan to stay in your home at least five years, because then the up-front loan costs make a reverse mortgage a bad deal. When I get to be 85 or 90, I'll probably get one.

Source: Bob Bruss