Cash-challenged seniors who want to stay in their own homes have kept reverse mortgages high on the public radar. But, despite glowing testimonials from some customers, not everyone thinks they’re such a good idea.

In general, a reverse mortgage converts home equity into cash in several different ways, ranging from monthly payments to an equity line to one-time payouts — or a combination. The amount you can borrow varies according to your age, the value of the home, current interest rates and loan fees.

Are reverse mortgages a good idea? Most news stories infer they are. Reports suggest reverse mortgages can be a source of ready cash when it’s needed. But, like anything that impacts your bottom line when your earning potential is limited, taking out a reverse mortgage isn’t a no-brainer.

The cons:

Zoran Basich, an elder law attorney and operator of Nursing Home Solutions, a California-based company, says he believes reverse mortgage lenders fail to give seniors the full story when it comes to cashing out home equity.

“What they don’t tell you is…that the front load is very high,” Basich says. He says lenders like reverse mortgages because “these (loans) are very profitable to write in the short term.”

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A hospital lobbying group asked Gov. Charlie Crist Tuesday to call a special legislative session to hash out the future of no-fault automobile insurance before the state law sunsets Oct. 1. Rather than drag out the law, state Sen. Jim King, R-Jacksonville, would like to see it replaced.

The Florida No-Fault law requires drivers to purchase personal injury protection, which pays up to a maximum of $10,000, regardless of fault, for injuries caused in an automobile crash. Hospitals rely on the mandatory medical coverage provided by auto insurers to help pay for care provided to accident victims, especially those without health insurance.

In the special session, the Florida Hospital Association would like lawmakers to agree to extend or reform the No-Fault law, or replace it with some other form of mandatory medical coverage.

Without PIP dollars, hospitals say, they would be forced to shift some of the costs of treating uninsured accident victims to public and private health insurers, who would then pass it on to their customers through higher premiums, and out-of-pocket costs.

The auto insurance industry, however, wants to get rid of PIP, saying it forces drivers to buy extra health insurance coverage they don’t need. They also point to claims fraud under the PIP system.

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Inflation fears have sent interest rates on home loans soaring and borrowers with adjustable-rate mortgages scurrying to refinance.

The challenge is finding an affordable loan.

Just as rates have risen, home prices have declined and credit standards have been tightened, making it difficult to get a reasonable rate, experts say.

Here’s a step-by-step guide to negotiating today’s mortgage market.

Step 1: Check your credit
Almost all lenders offer different rates for different risks. Even a relatively small change in a credit score can make a considerable difference in the rate a borrower pays, said Jeff Lazerson, president of mortgage shopping Web site MortgageGrader.com.

On June 12, for instance, rates on 30-year fixed-rate mortgages ranged from 6.38 percent for a borrower with perfect credit to more than 7.25 percent for a borrower with substandard credit, Lazerson said.

It’s often easy to goose your credit score by a few dozen points, ensuring a better rate, Lazerson said.

Sometimes all it takes is paying off a credit card balance or two, correcting errors in your credit report and ensuring that you have no outstanding late payments.

If you have a score in the mid-600 range, it might make sense to pay for credit advice.

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Kimmel & Silverman, a nationally recognized automotive lemon law and consumer advocacy firm, has opened the nation’s first ever home lemon law practice, dedicated to providing legal assistance to home owners who suffer defects related to new construction, renovation, and installation of major components. The firm has created a new website, www.HomeLemonLaw.com, to educate consumers and outline legal protections that may apply.

Using Federal law (Magnuson Moss Warranty Act), Kimmel & Silverman plans to offer contractor fraud legal representation at no cost. Should the consumer prevail, the recovery of all attorney fees and court costs are recoverable in addition to the amount recovered for the homeowner. “For 15 years, we have applied the Magnuson Moss Warranty Act for consumer claims at no cost to clients. Many people are unaware that this help is available when going up against billion-dollar manufacturers,” says Founding Partner Craig Thor Kimmel.

Based on April 2007 figures recently released, the U.S. Census Bureau estimates that 981,000 homes will be sold in 2007, and many more will go through significant renovation and remodeling. Kimmel & Silverman have found that the market for home improvements has accelerated as well. They have seen a rising number of calls asking for help with these types of problems and have pledged to assist consumers in cases involving home improvement fraud including defective materials, mold, siding, foundations, floors, windows, drywall installation, flooring, ceilings, fireplaces, roof, retaining walks, soil erosion and other claims.

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Older borrowers use the loans to cash in equity

Like millions of Americans, Bill and Helen Bluett’s greatest financial asset is their home, a Spanish-style dwelling just one-quarter of a mile from the ocean in San Clemente.

Selling the place and buying a less expensive one elsewhere could have brought the couple hundreds of thousands of dollars in extra money for their retirement years. But there was one problem with that idea.

“We love our home,” said Bill Bluett, 67, a retired mechanical engineer. “We love our neighborhood. As long as we’re physically able, we want to stay right where we are.”

So this year, the Bluetts signed up for a reverse mortgage, a type of loan that allows older borrowers to tap their home equity without making payments as long as they live in the house.

With the money, the Bluetts are more than able to take on projects like remodeling the kitchen and bathrooms. More important, the reverse mortgage makes them financially prepared, Bill Bluett said, for “any emergency - whether it’s medical or whatever - that might come up.”

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Tenfold increase in HUD HECMs over the last six years

More seniors than ever before are reaping the benefits of reverse mortgages to enjoy their golden years, according to the U.S. Housing and Urban Development.  New data from HUD reveals that more than 300,000 seniors have used the federally-insured Home Equity Conversion Mortgage (HECM) loan program to convert the equity in their home into cash without having to move.

“For some senior citizens on fixed incomes, reverse mortgages are a great way to cash in on their home equity to make needed repairs, pay unexpected medical bills or just to supplement their retirement,” HUD Secretary Alphonso Jackson said..

“Seniors shouldn’t have to choose between taking out a loan to fix up their home and putting food on the table.  With a reverse mortgage, this difficult decision is a thing of the past.”

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About 92% of Massachusetts residents are aware of the state health insurance law that requires all residents to obtain health insurance by July 1, according to a recent poll by Suffolk University/Channel 7 News, the Boston Herald reports. The poll, which surveyed 400 Massachusetts residents, found:

* 49% of residents said that individuals should not “be compelled to buy health insurance even if they don’t want it,” compared with 42% who said health coverage should be mandated;

* 79% said health care should be provided at no cost to residents with annual incomes below the federal poverty level;

* About 34% of residents said the state could not afford to provide health insurance to lower-income residents, while 49% of residents said the state could afford it;

* 47% believed Massachusetts will become a magnet for low-income people as a result of the law, compared with 42% who did not think low-income people would be drawn to the state because of the law;

* 68% said they are confident that they receive quality health care;

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As the old saying goes “a man’s home is his castle.” The benefits of owning a home are many, including financial security. While a home mortgage is good for your financial stability, refinancing for a better mortgage than you originally qualified for can benefit your finances even more.

Here are a few reasons for refinancing your mortgage and using your home to your advantage:

* Lower Your Monthly Payments

Refinance to get a lower interest rate, which lowers your monthly payments, or simply change the type of loan you have or both. With rates changing so frequently, homeowners cannot afford to not consider refinancing. Why pay more when you don’t have to?

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Hickey and Walters (Bespoke) submit: S&P/Case Shiller recently released the March figures for median home prices in the 20 cities they analyze. As many of you know, the Chicago Merc trades futures contracts based on these home-price indices.

Below we highlight the difference between the actual March home price figures and the contract price of the home-price futures expiring in May 2008. As shown, all eleven contracts are indicating increased weakness in the housing market. Las Vegas is expected to decline the most, while San Francisco is expected to decline the least.

We also made charts of the historical year-over-year monthly percent change in the actual home-price figures for the 20 cities that S&P/Case Shiller tracks. These charts paint a pretty good picture of the severity of the declines in home price appreciation across the board. The one exception is Charlotte, where a decline has yet to take place.

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Reverse mortgages are becoming popular financial planning tools for seniors in retirement. When Social Security was first implemented in 1935 the average life expectancy was 65 years. Today people are living healthier lifestyles and with improved medical technology we are living far longer than Franklin D. Roosevelt ever imagined.

This is a sort of good news/bad news statistic. One of the greatest fears for older Americans is that they will outlive their assets. Even if you thought you adequately funded your retirement when you first retired, you may live so long that you will run out of funds to support yourself. The fear of insolvency will increase as life expectancies continue to climb and Social Security and Medicare become more tenuous.

The enormous pressure that will be put on these entitlement programs when 78 million baby boomers begin to retire in the next couple of years, is almost incalculable. One thing for certain, is that we are all going to have to take steps to be personally responsible for funding a greater portion of our own retirement and health care than we might have predicted.

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