Good Question

DENVER (CBS4) ― Nancy Tucker has found a way to stay in the home she loves. It pays her.

"There is no way as a retired person that I could afford all of the utility bills and the other bills that I have and make a mortgage payment on top of this," she says. Several years ago, Nancy took out a reverse mortgage.

It's really not hard to understand.

Instead of paying in to pay down the money you owe, you use the equity you've built up in your house. For Nancy, she used it to pay off the remainder or her mortgage.

"So I didn't actually get any money, I just don't have to make any payments any more."

Say your home is worth $200,000 and you have $100,000 remaining on your mortgage. In a reverse mortgage, you can take the $100,000 in equity and use it.

Nancy simply paid off her remaining mortgage so she no longer has a monthly mortgage payment. She uses the money she would have sent to her mortgage holder every month to live.

Dan Harder, vice president of broker 1st Reverse Mortgage, says there are several ways you can take the money.

"The monthly payment being paid to them, taking it all in a lump sum like an equity line or a line of credit."

Harder says the loans get close scrutiny. "One of the beauties of this program is it's very government regulated ... because it's a government insured program it's may be one of the safest mortgage products available."

There are a few things you'll have to consider, says Kathy Snow, a senior housing counselor for the city of Aurora. First make sure it's an FHA insured loan.

"I would also recommend that they're working with an in-state or local lender, it's not something that I would start doing through the mail with a mortgage company."

The government requires that anyone getting a reverse mortgage undergo third party counseling done by someone like Snow. She has no vested interest in whether you get a loan or not.

Before you even consider a reverse, you'll have to remember you need to be at least 62.

But counselors like Snow suggest other family members know what's going on. You have to remember that when you sell the home or pass away, the reverse has reduced or even eliminated the home's equity. That means any money you're planning to pass along to your heirs will be cut.

The upside is that a grandparent may want to draw equity off a home to help pay for a grandchild's college education before they pass away.

There is, of course, a cost.

"They have the usual regular mortgage costs, the title insurance, the recording fee, the origination fee," says Snow. "The properties all have to be appraised. So there is an appraisal fee."

The biggest cost may be the insurance. That's 2 percent of the value of the home.

Overall the cost for a reverse mortgage is likely to total about 6 percent of the value of the home.

The insurance is what can save families.

If the value of the home goes down, the insurance pays any difference at the end.

Say your $200,000 home goes down to $150,000 by the time you pass away. Your heirs are not on the hook for the $50,000 the home comes up short when it's sold.

Another benefit, points our Harder, is the insurance helps you stay in the home.

"As long as the senior homeowner is alive, they cannot lose their home."

Nancy has to remember however that if she sells, she won't have much equity to take to another home. But for her that's just fine.

"Of course that won't be happening, because I don't want to move."

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