Tom Kelly’s new book may help answer that question.

With age comes wisdom – and health issues, property taxes and roofs that need repair.

An increasing number of seniors are finding that although they are house rich and not necessarily cash poor, what they have financially still isn’t working.

Although making home improvements and taking care of the bills would bring them peace of mind, many seniors are of the mindset that they have to make do and leave something for their children to inherit.

Taking out a loan wouldn’t occur to them. Better to be safe than sorry, they think.

“The goal of seniors – the G.I. Generation born from 1901 to 1924 – was to pay off the roof over their heads and then get by so they can leave something for their children,” says Tom Kelly, author of “The New Reverse Mortgage Formula. How to Convert Home Equity Into Tax-Free Income” (John Wiley & Sons, Inc., 2005 Original Paperback: $19.95).

But just because you’re old doesn’t mean you stop dreaming, Kelly says, and health issues must be faced.

Improved reverse mortgages now give homeowners ages 62 and up the option to get the cash to take care of needs and dreams, with no monthly payments or fear of losing their home.

And, there can still be something for the kids.

Kelly – Bainbridge Island’s nationally syndicated newspaper feature writer and radio talk show host – demystifies reverse mortgages, explains their increasing popularity, and shows how readers can determine if such a move is right for them.

He also details the available programs and the options for drawing out the money.

“A reverse mortgage is like a home equity loan without a payment, and it’s nontaxable, like a refinance,” he said. “It’s your money. And the benefit comes out at the end. You take a mortgage interest deduction when you sell or move out.”

The loan balance increases and the equity of the home decreases during the term of the reverse mortgage. Interest is not charged until the funds are actually used.

Borrowers may choose to receive funds in monthly payments, a lump sum, as a line of credit or a combination thereof.

The interest rate on the reverse mortgage is determined either at the time of the application or at the time the loan closes, whichever is lower, Kelly says.

Three reverse mortgage products are available, and no one program is right for everyone. Health, income and credit rating are not considered when qualifying for the loan, Kelly says.

“On Bainbridge, seniors find themselves sitting on equity they never imagined,” he said. “A reverse mortgage can help them live more comfortably, whether they face significant health issues or significant redos to the house they’ve lived in for decades.”

Bad reputation

Kelly was moved to write this book when he realized it is the hottest topic on his radio show.

Seniors and adult children of seniors want to know if reverse mortgages are really as good as they’ve heard. And the number of people undertaking such a mortgage has doubled and tripled in the last four years.

“Historically, reverse mortgages had a very poor reputation when they were first written,” Kelly says. “Most had an equity portion for the lender, meaning: A lender got a piece of the home equity appreciation when the home was sold and the owner or estate got a bill from the lender for an astronomical figure.

“In the 1980s, when the government said ‘we’re going to insure them,’ the tide turned. Now any appreciation goes to the owner and the owner’s estate.”

Additionally, borrowers make no payments until they move out or sell the home, and they can never owe more than the house is worth at the time they closed the deal.

What is driving seniors to take the reverse mortgage plunge?

“Health care is a huge issue for people and this country,” Kelly said. “Seniors look at Medicare and Medicaid and look at their retirement and say ‘How will we ever make it?’ Their greatest asset is their home.

“The longer they live there, the more (money) they can draw out. And many didn’t know they had it.”

Couple that with the rapid rise of appreciation of Western Washington homes and the fact that people are living longer make seniors ask “What else do we have?” Kelly says.

Seniors want to stay in their homes for as long as possible. The cost of in-home care and medication is high and often people don’t have the cash to cover it all. Nor do many seniors have long-term care insurance.

A senior policy advisor at AARP calls the reverse mortgage “if not the silver bullet…certainly a piece of the pie.”

Also luring seniors are the need for basic living necessities; the inability to pay property taxes; and the desire to augment dwindling financial portfolios, make home modifications or assist grandchildren with living or college expenses.

At first, most of Kelly’s callers were single women over age 75.

“They live longer and want to stay in their area,” he says. “They know they’re getting older and they’re finally thinking about themselves.”

Initially, reverse mortgages were looked at only as a desperation measure. Now seniors are doing and planning instead of dreaming. It’s their money to utilize, Kelly says.

Kelly cautions seniors to do their research before they undertake the application process. Some people are not good reverse mortgage candidates.

These include seniors who emotionally can’t stand losing a spouse in their home and people who want to leave every single cent to their children, Kelly says.

Also, sometimes there isn’t enough equity in the home to merit the costs of the loan or a person’s borrowing philosophy precludes their taking advantage of such a mortgage.

Reverse mortgages are for people who really need the money, Kelly says. But not necessarily for what one may think.

In his book, he profiles seniors who used their money to swim with dolphins, buy a plane and install a home elevator, as well as those who bought a reliable car and made upgrades with an eye toward growing older at home.

Unless there is a medical emergency, a reverse mortgage should not be viewed as a short-term fix, Kelly says. And the timing of the sale of the home and subsequent tax deduction also can be important.

“It may not be for everybody, but it helps a lot of people,” Kelly said. “I’m all about seniors having options to make their lives easier and more comfortable.”