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Loans

As Seen on TV: Reverse-Mortgage Pitch is Legit

Reverse loans let seniors convert equity to cash, but at a price.

In 1978, James Garner won the People's Choice Award for Favorite Male TV Performer. More recently, you may have seen him in a new TV role -- as spokesman for reverse-mortgage lender Financial Freedom.

Reverse mortgages let homeowners 62 and older convert equity to cash, which needn't be repaid as long as they live in the home. New regulations raise the loan limit to $625,500. And starting this year, seniors can use loan proceeds to buy a new home. At a time when retirement savers are vexed by the vagaries of the stock market and the economy, commercials featuring the star of Maverick and The Rockford Files that promise to turn equity into tax-free money sound pretty good.

Financial Freedom is upfront about the need to explore other options -- such as applying for a home-equity line of credit, downsizing or postponing retirement -- before taking out a reverse mortgage. And it steers clear of troubling marketing claims spotted elsewhere: that reverse mortgages are a government benefit (they're not) or that you can never lose your home (you can if you don't pay taxes and insurance).

Reverse mortgages have relatively high upfront costs, so they're best if you plan to stay put for a while. They're not a fix for temporary hardship (see kiplinger.com/links/reversemortgages).