Jennifer Pokorny recalls the customer who called his home a "loyal son." "He said, 'I've taken care of it for all these years, and now it's time for it to take care of me,'" recalls Pokorny, a mortgage loan officer and author of "The Pocket Idiot's Guide to Reverse Mortgages."

How can a home take care of its owner? The customer got a reverse mortgage, a loan that lets homeowners age 62 and older convert their home's value into tax-free cash.

Repayment is not required until the home is no longer the borrower's primary residence. There is no interest on the loan until the borrower dies, sells the home or permanently moves. "

They can never foreclose on you, because you're not expected to make a payment," Pokorny says." "It's the best thing the government has done for seniors since social security."

A RISING TREND

Reverse mortgages have been around in some form since the early 1960s, although most were insurance products, Pokorny says. In 1987, the U.S. Congress passed the FHA reverse mortgage insurance proposal, which became law in February 1988. In 2000, Congress approved an absolute limit on origination fees and refinancing reforms.

Legislators clearly realized the value of reverse mortgages for seniors who are house rich yet cash poor.

"My customers are generally active and have lived in the area a long time," Pokorny says. "They want to stay where the live until they die, but they need some extra cash. Maybe there is a major illness or the house needs repairs and they don't have the money to make them."

In the recent wake of rising real estate values and escalating health-care costs, the number of reverse mortgages has skyrocketed from 157 in 1990 to 43,131 in 2005, according to the Department of Housing and Urban Development.

Yvonne Graves, a process administrator with WSFS Bank, has seen interest in reverse mortgages double each year since 2002, when she started in the business.

Aging baby boomers will only fuel the trend. "Many boomers have been using home equity as an ATM machine for some time," notes Neal C. Cutler, head of the Boettner Center for Financial Gerontology at Widener University

Some borrowers think you must use the money just for medical or housing costs. But that depends more on the source of the loan. With the standard FHA-insured home-equity conversion mortgage, also known as HCEM, you can use the funds for any purpose.

Nevertheless, reconsider if you're planning to put the cash into risky investments or a "Mongolian gold mine," says Andrew Housser, co-CEO of San Mateo, Calif.-based Bills.com, a free Web site that focuses on personal finance issues. If the stock goes bust, you lose both the cash and your home's equity.

Moreover, if you plan on stashing the cash in a bank account and earning interest, think again. You won't lose Social Security or Medicare benefits, but the savings could impact other public programs, such as Medicaid, Housser says.

Graves agrees. "We tell people to consult their tax advisor before getting a loan."

Reverse mortgages are not for everyone, Housser says. Closing costs are often higher than traditional mortgages and home equity lines of credit. "If you're looking to sell in a few years, the program may not be for you," Grave says. You won't recoup the payout from the closing costs.

Depending on your health and finances, you may fare better by selling your home and buying or renting another home.

Reverse mortgages are also unwise if you're determined to leave the home to your children. Typically the sale of the home pays off the loan.

Moreover, reverse mortgages are often more complicated to understand than traditional mortgages, which is why many states require third-party counseling prior to obtaining one. "You must understand the terms," Housser says.

Admittedly, some people -- and financial planners -- are averse to spending more than you earn and using your home to make up the difference, Housser says. That is particularly true of today's older generation, Cutler adds.

"They're so thrilled to pay off a mortgage that they are less willing to borrow on it," Cutler explains. Or, they are attached to the idea of leaving an inheritance.

However, your heirs may have a philosophical approach. "I'm not expecting to get that much from my parents," Housser says. "I expect them to enjoy retirement."

QUALIFYING FOR A REVERSE MORTGAGE

You must be 62 or older, but you do not need income. There is no medical exam or credit check. The loan amount will depend on your age (or the age of the youngest co-borrower), the appraised home value, the current interest rate and the lending limit in your area.

Older homeowners with high home values can borrow more at a lower interest rate, since the loan life is presumably be shorter.

As with refinancing, you are getting a new mortgage. If you still owe on the original mortgage, part of the new loan will go toward paying that debt.

PAYMENT OPTIONS

Some mortgages offer one lump sum or fixed monthly payments.

A tenure plan offers fixed amounts for as long as one borrower occupies the house as a principle residence. Say one spouse goes into an Alzheimer's unit; the other will still receive the benefits as long as he or she resides in the home. (In fact, some borrowers use the cash to pay for long-term care for a partner, Pokorny says.)

A term plan, however, provides fixed payments for a period of selected months. You must have a financial plan in case you outlive the term, Housser says.

You can also open a line of credit and choose when you wish to take out money, and you can combine the credit line with either a term or tenure plan.

You or the co-borrower need not repay the loan as long as one of you resides in the home and keeps up the taxes and insurance. You must also keep the home in good condition.

You or your heirs will never owe more than the home's eventual sale price, even if it is less than the loan and its accrued interest. If the sale price more than covers the debt, you (or your heirs) get the excess.

Despite the obvious benefits, reverse mortgages are not to be taken lightly. "It is a real estate transaction; it's not a social welfare program," Cutler concludes. "It's banking. It's investment."

For more information on reverse mortgages, visit the AARP Web site, www.aarp.org/money/revmort. To find a third-party counselor, visit the HUD Web site, http://www.hud.gov/offices/hsg/sfh/hcc/hccprof14.cfm.