by Ginger Kazay

Created on: March 25, 2007   Last Updated: April 13, 2007

You are ready to retire and you already have paid off your mortgage or you have a lot of equity in your home. If you find you are short on retirement funds, your home can come to the rescue.

It is called a reverse mortgage and as more and more seniors are finding themselves on a fixed income and are faced with rising costs their home can be a real "lifestyle saver".

There are two types of reverse mortgages:

1) You receive a set amount from the mortgage company every month for as long as you live, own the home and have equity in the home. When you die, the home is sold and the mortgage company gets back their money plus interest.

2) You receive a "line of credit" against your home's equity. As long as you have equity in the home you can make any size withdrawal. If your retirement income is enough to hand your day-to day living expenses, then you can use this line of credit to pay for major unexpected expenses (car repairs, home repairs, etc.). If your retirement income is too low to cover everything you can use the line of credit to pay those expenses also and as your expense increase you can increase the amount you take from your line of credit. Once again, when you die the house is sold and the mortgage company receives their money back plus interest.

Either of these options allow you to use your home to help pay for your retirement and you do not have to sell your home and move in order to do it.

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