The most popular form of equity advance for retired persons is the Reverse Annuity Mortgage (RAM). The lender will advance the loan to the homeowner (borrower) monthly and will pay the borrower over several years. With every payment made, the outstanding balance on the mortgage for the property increases. Part of the equity advance goes to the lender to pay the interest on the entire loan and the rest goes to the homeowner (borrower). Over time, as the mortgage loan gets larger, the net check sent to the borrower decreases as the interest payment takes more of the monthly disbursement.

The loan is usually repaid in three ways:

• The borrower dies and the loan is settled by the estate.

• The property is sold.

• A new appraisal is done to increase your borrowing power after the maximum loan amount is reached.

A WORD OF WARNING: These loans are not permitted in all states (such as Texas) and are of some risk. Study all your options very carefully.

You make your mortgage payment two times a month, instead of monthly. Since there are 52 weeks in the year, you end up making 26 payments, which is the equivalent of one month's extra payment. This additional payment significantly reduces the amount of interest charged for the mortgage and often reduces the term of the loan.

Most lenders require that you maintain a deposit account from which payments can be drawn on an automated basis. This eliminates some paperwork and the extra mailing that would be necessary with the additional payments. Some lenders will require that the borrower's paycheck be direct-deposited into this same account.

You will want to consider this option carefully, as it could be restrictive for your personal financial arrangements. The biweekly mortgage could also have a less competitive interest rate and may not be offered by your selected lender.