Reverse mortgages -- strangling on a life line

Like many of us, I sometimes thought about using a reverse mortgage as a backs-to-the-wall post-recession defense against old age poverty. Then I did the math. Stockpiling cat food is more appealing.

That won't be true for everyone, of course. Reverse mortgages can be nifty way for homeowners who are 62 or older to pull equity out of their homes to meet living expenses. How nifty depends on their ages, the value of their homes and what other choices they have to meet their income needs. Those are different for each of us. AARP has a handy calculator to help you run your own numbers.

But if you are a 63-year-old thinking of pulling, say, $190,000 out of a modest suburban home, the numbers are not pretty. After you lop out closing costs, mortgage insurance and other fees - which can be hefty, as critics warn - what's left is either a lump sum or credit line somewhere between $55,700 and $84,920 or a monthly payment between $417 to $524. The difference depends on whether you go with a fixed rate or variable loan.

The money is tax free, which is good. But where I live the low end of my potential monthly payout barely covers property taxes and upkeep needed to get the loan in the first place. And pulling money out of your house might complicate your eligibility for Medicaid or other programs that might be more valuable.

Those are just some of many questions you need to think through before considering such a loan. Bottom line - using our homes as ATM machines didn't work out before. We don't want to get stuck in a similar jam again.