It seems having your home paid off, or almost paid off, these days means more than relief for those nearing retirement age or older.

According to the National Reverse Mortgage Lender’s Association Web site at www.reversemortgage.org, &#8220a reverse mortgage enables older homeowners (62+) to convert part of the equity in the homes into tax-free income without having to sell the home, give up the title, or take on a new monthly mortgage payment.”

The site says &#8220the reverse mortgage is aptly named because the payment stream is ‘reversed.’ Instead of making monthly payments to a lender, as with a regular mortgage, a lender makes payments to you.”

Reverse mortgage funds can be spent any way the borrower pleases.

The borrowed money and any interest it accrues is paid back to the lending institution by a person’s estate after they die.

&#8220Or if they vacate the property for more than a year, they have to put it on the market, sell it and pay their debt off,” said Wayne Thompson, a member of the Anti-Predatory Lending Task Force sponsored by the Kentucky Housing Corp. and owner of Residential Mortgage, a Lexington business that been providing reverse mortgages since 1995.

Thompson said a person is allowed to live outside their home for a year before paying off the loan because older people are often forced to live away from home in nursing homes or other places due to health reasons for a while.

The money left over after a homeowner’s residence is sold and the loan has been paid off is kept by the homeowner or their estate.

&#8220There is almost always equity left over,” Thompson said. &#8220The other nice thing is it’s a non-recourse loan, meaning if they live to be 110 or live to be in an area where property values go down, at no point can the senior or their family be responsible for the shortfall.”

According to Thompson, with a reverse mortgage, there are actually two mortgages put on the borrower’s home, and one isn’t a typical second mortgage.

&#8220The lender has the first mortgage and they’re responsible for sending the senior payments,” he said. In addition, &#8220there’s a dormant mortgage to HUD (Housing and Urban Development) and that serves one purpose: If the lender goes broke, the HUD mortgage goes in. HUD makes sure the senior gets their money and never gets hurt by the failure of the lender.”

The kinds of homes eligible for a reverse mortgage &#8220include single-family homes, manufactured homes (built after 1976), qualified condominiums and townhouses,” according to the NRMLA Web site.

&#8220Your age and market value of your home determine the amount of money you can receive,” according to a brochure about reverse mortgages from Thompson’s Residential Mortgage, which is not the same as Residential Mortgage Corp. in Bowling Green.

Tony Walker, owner of Walker Financial Services in Bowling Green, said Thursday, &#8220I think reverse mortgages are a viable option. They’re getting more and more popular. … It is an excellent means for someone to supplement their income. I think you’re going to see more and more of them because people are living longer.”

Walker said one reason he recommends reverse mortgages is because they’re tax free.

But Walker said he recommends that people talk to a financial expert, certified public accountant or attorney before entering into any reverse mortgage agreement. That’s because those who enter into such agreements without having all the facts could fall victim to predatory lending.

A lending institution may say, for example, &#8220we’ll give you a payout of ‘X,’ but the payout may not really be that good,” Walker said. &#8220Always have them disclose how they calculated it, what interest rate they used and all fees. … It’s just like people with credit cards. They think it’s a great deal but it’s not if it’s got 19 percent interest on it.”

Thompson said it’s a federal regulation that before a lending institution can give a reverse mortgage, the borrower must go through counseling with a HUD-approved counselor, &#8220a disinterested third party who can sit down with the senior and their family, hopefully, and say ‘What questions do you have.’ ”

Donna Woods, president of Bowling Green-Warren AARP, said AARP educates its members that reverse mortgages can be a part of predatory lending and that people need &#8220to understand the ins-and outs of the particular contract that they are being offered, to be sure that it is being offered to their best advantage.”

Woods said seniors who have questions about contracts can use the Better Business Bureau’s free Elder Contract Review Services program.

&#8220With that, seniors can submit any contract that they’re looking at,” Woods said. &#8220It may be (for something) as simple as blacktopping their driveway all the way up to mortgages.”

Woods said the contract review takes place in Louisville with volunteer attorney who &#8220can advise that senior whether it’s a sound contract to their benefit or whether it’s not.”

Thompson said reverse mortgages aren’t good for everyone, particularly those who expect only to live a couple more years.

The fees associated with the mortgage &#8220are expensive and you won’t be able to pay them off in a year or two,” he said.

– Seniors can reach the Better Business Bureau’s Elder Contract Review Services hotline at (502) 588-0035 or (502) 583-6546 or (800) 388-2222. There is also an abundance of information about reverse mortgages, including a reverse mortgage calculator, on AARP’s Web site at AARP.org.