These plans are essentially variations of three familiar transactions: loans, sales, and deferred payments.

In home-equity loan plans, you arrange for a reverse mortgage (or what is called an adjustable-rate reverse mortgage or reverse shared-appreciation mortgage), exchanging equity for cash while retaining title to your property and continuing to occupy your home. Each month the lender, usually a bank or a savings and loan association sends you a check. These checks are a loan that must eventually be repaid with interest. But you do not have to pay the money back until a specified period has elapsed – five or ten years or until you sell the home or die. In most cases your home is ultimately sold to repay the debt, though you can use a short-term reverse mortgage to pay living expenses until a pension or other source of income comes in. When your home is sold, any value beyond the debt goes to you or your estate.

Home-equity sale plans differ in that you lose title to your home. In one type, for instance, called a sale-leaseback plan, you sell your home to an investor who immediately leases it back to you for life. You become a renter in the home you have just sold.

The February 1987 issue of the Gerontologist described a Marin County home-equity demonstration project, recently expanded to San Francisco and eight other California counties (Alameda, San Mateo, Santa Clara, Contra Costa, Sonoma, Sacramento, Napa, and Orange). The program offers eligible applicants financial counseling and a choice of either a home-equity loan plan or a sale-leaseback plan. Most people who participate choose the loan plan to help pay for long-term home health care.

Home equity is not widely available. For instance, to be eligible for this California program, applicants must be sixty-two or over, have a low or moderate income and modest assets, own their homes outright, and live in one of the counties the project serves. Because programs are expensive to run, home equity may never be widespread, though the idea is catching on. There are now demonstration projects in Tucson, Boston, Milwaukee, and Nassau County, New York. There is even one in Musashino, Japan. From the National Center on Home Equity in Madison, Wisconsin, you can find out whether such a program exists in your community.

If you are “house rich” but not eligible for home-equity plans, you have other options. For example, suppose money is not a major concern, but the size of your house is. You feel uncomfortable living alone in a four-bedroom home, rattling around where a family would fit. Your house is unwieldy, hard to clean, heat, and maintain. You hate finding someone to mow the lawn. You are frightened of being by yourself. What would happen in a robbery or a medical emergency? Still, you refuse to sell.

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GENERAL HEALTH