If youre at least 62 and have equity in your home, you may be able to have your home equity pay you in the form of a reverse mortgage.  Even if youre still paying on your home mortgage, you may be eligible to apply for one of the most creative loans ever available.  The income from a reverse mortgage is tax free, which cant be said about a lot of investments. 

The income from a reverse mortgage can be used for anything, there are no restrictions.  You can use it for whatever needs you may have.  When do you pay it back?  When you move out of your house and its no longer considered your principal residence, whether you sell the home, you (or your surviving spouse) die, or whether you move into a nursing home or go to live with family members.  Where do you get the money?  Well, you could sell the home, or you could use other existing assets to pay off the mortgage (or both mortgages, if you still have your purchase money mortgage).

If you take the mortgage out as a home equity line of credit, you take out what you need when you need it.  You can also receive a fixed amount monthly, the amount being dependent on how much equity you have and your age at the time you take it out.  If you take it out as a lump sum, you have to spend it all in the first month you receive it in order for it to be completely tax-free, and it doesnt bump up your taxable income for Social Security or Medicare purposes. If you take out a lump sum, spend some of it and leave some of it in your checking (or savings) account, the amount you dont spend in the first month will be counted as a resource, and could affect Medicaid eligibility.  If Medicaid is a concern (and it may be, if youre thinking about nursing home care), you should probably consult a Medicaid specialist.

Before you can receive the funds from a reverse mortgage, youll be required to talk to a Reverse Mortgage Counselor.  The U. S. Department of Housing and Urban Development (HUD) provides a list of counseling agencies that you can consult for more information.  You can also consult AARP.  The counselors can answer all your questions about reverse mortgages.

The amount you receive can never be more than the equity in your home.  If you die, and the house is sold, the proceeds will first go to pay off the mortgage and the excess will go to your estate.

There are costs and risks to use this kind of loan, and if you still have a first mortgage the reverse mortgage will have to be considered the primary loan.  Closing costs apply, and may be higher than a purchase money mortgage.

If you're looking for a list of reverse mortgage lenders in the Denver area, check out http://tinyurl.com/oh9n3.