The Backwards Loan

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--OTHER OPTIONS. Why not just sell your home and move? Particularly now, you may find that you can get more money than you ever imagined, then scale down close by or relocate to a lower-cost area. Also talk to your grown kids. Often parents mistakenly assume that their kids want the family home (when they don't), or they don't have extra money with which to help their parents (when they do). Believe it or not, federal law requires borrowers to go through financial counseling before taking a reverse mortgage--a paternalistic rule but probably a helpful one. The counseling takes two or three hours and is provided free by federally approved agencies.

--THE NEGOTIATION. For the vast majority of people, a reverse mortgage insured by the Federal Housing Authority (FHA) is the best deal. This is called a home-equity conversion mortgage, and many of its costs--including interest, which floats with one-year Treasury bills and is now 3.55%--are consistent from lender to lender. So you don't have to shop or dicker. Exceptions include origination fees, which may be as high as 2% of loan value, and servicing fees, generally around $30 or so a month. Non-FHA reverse mortgages with higher loan limits are available from Fannie Mae (the Homekeeper Loan, up to $322,000). Just remember that a reverse mortgage is only for people with compelling reasons to stay in their current home.