Creators Syndicate

FIGHT BACK!  BY DAVID HOROWITZ 

Tapping Your Home Equity 

        By the time they reach retirement age, older homeowners  often
have a lot of equity built up in their homes,  especially if the house
is paid for. And yet, many of these  same people are "home-rich and
cash-poor," struggling just to  get by on a limited income. They could
be using that money  for other things --medical expenses, back taxes,
travel,  major purchases or additional monthly income. 
        In a reverse-mortgage arrangement, homeowners put up a  portion
of the equity in their homes. The lender than pays  that out in either
a lump sum, regular monthly installments,  lines of credit or a
combination of all three. Because it's a  loan, the additional income
is tax-free. The loan is paid off  when the homeowner either moves or
dies and the property is  sold. 
        But reverse mortgages are not free, and they are not for 
everyone. First of all, reverse mortgages are usually more  expensive
than conventional home-equity loans. The homeowner  must pay
substantial setup fees plus points, closing costs  and compounding
interest -- all of which is added to the  amount of the loan. A reverse
mortgage also pledges the  property to the lender, which means it
cannot be left intact  to the borrowers' heirs. 
        Those are the negatives. On the positive side, reverse 
mortgages allow homeowners to get out from under old debts,  pay off
medical expenses, make home improvements, save their  property from
foreclosure or simply enjoy a higher standard  of living with the extra
income. 
        Reverse mortgages are available in all states except  Alaska,
South Dakota, Texas, the District of Columbia and  Puerto Rico. This
may change in Texas. A federal court  recently overturned a provision
of the Texas state  constitution, which effectively forbids home equity
loans of  all types. The attorney general in Texas plans to appeal the 
court's ruling. 
        Taking out a reverse mortgage is not a step anyone  should take
without consulting a family member, trusted  friend or professional
financial advisor. The Federal Housing  Authority rules now require
third-party counseling on FHA  insured reverse mortgages. Homeowners
should also compare  reverse-mortgage costs with the cost of a
conventional second  trust deed or home equity loan. 
        If you'd like to know more about how reverse mortgages  work,
write to any of the following addresses for free  information: 
        "Home-Made Money": This is a consumer's guide to reverse 
mortgages and a state-by-state list of lenders. Write to the  American
Association of Retired Persons (EE0618), P.O. Box  22796, Long Beach,
Calif., 90801-5796. 
        "Facts For Consumers: Reverse Mortgages": Write to the  Federal
Trade Commission, Public Reference Branch,  Washington, DC, 20580. 
        "Reverse Mortgage Locator": This is a state-by-state  list of
lenders that is updated monthly. Send a check or  money order for $1 to
the National Center for Home Equity  Conversion, 7373 147th St., Apple
Valley, Minn., 55124. 
        If you have questions or comments, please write to David 
Horowitz at 72662,1775. COPYRIGHT 1994 CREATORS SYNDICATE, INC.