A mortgage lifeboat.

As he approached retirement age, gay San Diego senior Tom Giles, who is single and has no children, didn't have the kind of savings or support structure that could guarantee a comfortable lifestyle after the paychecks stopped coming. But he did own a duplex, one half of which he continues to live in while he rents out the other half.

So Giles decided to take out a reverse mortgage on his South Park neighborhood residence three years ago. "What I wanted to do was to create as much retirement income as possible so that in fact I could retire," he says. "I took early Social Security at 62, and then I have the income off the other half of my duplex, plus the reverse mortgage income, which is tax-free, by the way. It all added up to a substantial amount and essentially allowed me to retire five years sooner than I had originally thought I would."

Available to seniors 62 and over who own or have nearly paid off their deed, reverse mortgages convert a percentage of home equity into cash payments to homeowners, who retain ownership until they sell their home or pass away, after which lenders are repaid all cash advances plus interest by the homeowners' estates. While some financial planners warn of pitfalls, such as a loss of home value in a market crash, reputable lenders are bounded by a "non-recourse limit," which caps a borrower's debt at their home's value at the time of repayment. As with any mortgage, there are significant closing costs to consider, but for gay seniors or HIV-positive adults, a reverse mortgage can be a much needed lifeboat.

"Both seniors and HIV-positive folks are more likely to have increased medical costs and limited income," says Claudia Lucero, senior services coordinator at the San Diego Lesbian, Gay, Bisexual, Transgender Community Center, who recently hosted a seminar on reverse mortgages.

Drew Robinson, United Standard Funding's manager for the Southern California region, delivered the seminar. He says he regularly has to address misconceptions about reverse mortgages. "It's physically impossible to lose your home with a government-insured reverse mortgage," says Robinson, referring to mortgages protected by the Federal Housing Administration. 'You can't say that about other mortgages."

Despite continuing trepidation on the part of some seniors, FHA statistics indicate a more than fivefold increase in reverse mortgages, from 7,700 loans in fiscal 2001 to 43,000 in fiscal 2005. "I'm not at all sorry that I did it," says Giles. "I have an amortization table, so I can see how the house will appreciate in value. On my 100th birthday, if and when I get there, it's going to be so much more valuable than the amount of money I'll ever owe [through the reverse mortgage]."

Tom Giles

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By Dan Allen