Shifting into reverse: get a monthly check from your bank with a reverse mortgage.

• Author: Kronemyer, Bob

Instead of writing a check each month to your bank for house payments, how would you like to receive a monthly check from the bank?

Sound too good to be true? Not if you assume a reverse mortgage. Opposite of a traditional mortgage, you contract with a lending institution to convert some of your home equity to cash while retaining ownership.

But there is one catch: You have to be at least 62 years old to qualify.

"A typical borrower is about 77," says Ken Scholen, director of the National Center for Home Equity Conversion, a Minnesota organization that educates consumers and their advisers on reverse mortgages. "You don't need an income to qualify and you don't have a monthly repayment requirement, which are the two main problems that most retired people have with debt."

Nationwide, Scholen estimates there have been 18,000 reverse mortgages generated to date, the vast majority within the past three years.

Ruth MacQuillan, 78, of Culver, started receiving monthly checks in July. Her husband's lengthy stay in a nursing home because of Alzheimer's disease depleted much of their savings, and, upon his death in 1986, one of his pensions stopped and the other was reduced.

"I was having to draw from savings more and more for ordinary living expenses, so I began to think about the future," recalls MacQuillan, who is borrowing the equity from the one-story house she and her husband designed and built in 1957.

"I chose a rather low monthly payments because I also wanted to have a line of credit," says MacQuillan, whose new mortgage was arranged through Senior Income Reverse Mortgage Corp., a Chicago-based firm that serves 15 states, including Indiana.

"It was a wonderful feeling. It relieved me of so much worry," she says of that first check.

"It's for those who have a limited retirement income or no retirement income," adds Donald Austill, vice president of Home Owners Mortgage Service Inc. in Indianapolis, one of the few Indiana-based companies that offer reverse mortgages.

Most borrowers, like Ruth MacQuillan, opt for monthly checks, although lump-sum proceeds or simply a line of credit also are available. The amount of the loan depends on the person's age, the value of the equity in the home and the loan's interest rate.

Austill notes that there are no prohibitions on how the funds are used, which can be a plus to sophisticated investors.

"Depending on the interest cost at the time, it's conceivable you can take out a 7 1/2 percent loan and put...