Reverse mortgages are a special type of home loan that lets a homeowner convert the equity in his or her home into cash. These loans can allow seniors greater financial security to supplement Social Security, meet unexpected medical expenses or use the cash in other ways.

"Many seniors and their families are warming up to reverse mortgages. The newer reverse-mortgage programs are vastly better than their predecessors," said Jimmy Kang, a senior home mortgage consultant with Wells Fargo Home Mortgage. "For example, the most popular reverse mortgage is one through FHA. The rate is an adjustable-style loan, but at current market rates, the initial rate on the FHA reverse mortgage is below 3 percent."

For larger-equity homes, Kang said, there is a new program called Financial Freedom that can go as high as $2 million. He believes the main appeal of reverse mortgages is that there are no personal qualifications required. There are also no payments, as the accruing balance on monies used and the interest and closing fees are all deferred.

"By using the reverse-mortgage program, seniors can stay in their own home and enjoy the golden years of their life by tapping into their equity built into their home. They owe only what was used, and their estate, not the lender, receives the remaining equity in the home," said Kang.

Nancy Soule with Pacific Republic Mortgage said reverse mortgages are an alternative for seniors over the age of 62 and that they can be used in a variety of ways.

"Although some seniors are using reverse mortgages to continue to stay in their homes, others who want to scale down and sell their larger residence or purchase new, smaller residences still need a reverse mortgage to help them finance the purchase," Soule said.

While a reverse mortgage would not be good for someone in ill health facing convalescent care in the near future, it is an option for those in good health, said Soule.

"By putting down a large portion in cash, the senior can finance the remainder with a reverse mortgage and not have to qualify on the basis of income or credit, since there are no payments to be made. In addition, they may need money for fix-up costs and may use the reverse mortgage to finance those or for additional retirement income," she said.

Soule recommends seniors get counseling with an independent adviser through AARP or Consumer Credit Counselors who provide this as a service. She also encourages seniors to make sure to look at all options.

Reverse mortgages do come with a "buyer beware" recommendation, since scams have been reported. For more information about reverse mortgages, check out the U.S. Department of Housing and Urban Development website at www.hud.gov.

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 jnewton@jnpr.com.