Nancy Soule, a reverse mortgage specialist and a member of the Society of Certified Senior Advisors, is a loan officer at GMAC Mortgage. She says there is a growing use of reverse mortgages as equity in homes has increased significantly.

"Reverse mortgages are also used more since the newer reverse mortgage cash accounts finally address the needs of our high-cost areas. Prior to 2002, U.S. Department of Housing and Urban Development reverse mortgages limited the borrowing amounts to levels usually not suitable to the high-cost Bay Area," Soule said. "The amount available was typically under $150,000 and these reverse mortgages were used for financial hardship cases, helping borrowers with more monthly income, paying off a burdensome mortgage or often used for medical expense and in-home caregiving."

Since 2002, some reverse mortgages have offered an alternative that has become particularly attractive, with new reverse mortgage cash accounts limited only by the ages of the borrowers, who must be over 62, and the value of the home. A second feature involves limiting closing costs depending on certain circumstances.

"These two major changes have made it possible for seniors with high equity to pull from the equity in their home to help with their financial planning, give money to their children to enable them to buy homes or to allow them to use equity in their residences to purchase rental or second homes," Soule said.

These loans are what Soule calls "non-recourse," meaning a lender can never bill the borrower or heir if the loan amount ever exceeded the proceeds of sale. Also, the borrowers or their heirs retain full ownership and receive the unused equity in the home at time of sale by simply repaying the balance borrowed, $30 monthly service charges and the interest deferred, said Soule.

"The borrowers do not have to repay the loan until they move out of the property. There is no prepayment penalty to paying the reverse mortgage off in full. Because of this flexibility, it has become a unique tool for Realtors advising senior clients on home purchase and sales," Soule said.

According to Dennis Byron, a Realtor with Dennis Byron & Associates in Los Gatos, reverse mortgages can be dangerous if people don't understand all the details.

"I have to advise people to be very careful when it comes to these loans because the downside is you can lose your house and equity. Predatory lending is rampant among seniors. My advice to seniors is to always double check," Byron said.

It's important for seniors to consult with experienced professionals who are certified senior advisors or specialists. It's also wise to ask for advice from a financial planner, accountant or estate and trust attorney when considering the use of built up equity for retirement options.

Information provided in this column is presented by the Realtor members of the Silicon Valley Association of Realtors at www.silvar.org. Send questions on any topic to gmeissner@silvar.org.