In search of a new source of retirement income, baby boomers are doing what previous generations were reluctant to do - tap into the value of their home by using home-equity loans or reverse mortgages.

But without guidance, Americans are often unsure how to do this as a part of their financial strategy rather than as a last-resort measure.

To help these boomers, Connecticut-based MetLife Mature Market Institute (MMI) and the National Council on Aging (NCOA) have issued a new report, Tapping Home Equity in Retirement: The MetLife Study on the Changing Role of Home Equity and Reverse Mortgages. As a complement to the study, MMI is also introducing The Essentials: Reverse Mortgages, a free guide to help consumers better understand the product.

"Our research on baby boomers indicates that they are more open than previous generations to tapping home equity and considering reverse mortgages to help fund their retirement," said Sandra Timmermann, director of MMI. "With the right guidance and policy protection, reverse mortgages can be an important financial option for boomers who do not have adequate savings."

According to the report, 35 percent of older Americans view their homes not just as secure places to live but also as collateral for a loan. About 14 percent are taking cash out of their house through a home equity loan or reverse mortgage. These actions are not limited to middle-income families, for whom tapping the equity is necessary to fund their retirement. Affluent households are also turning to their homes for the cash value in order to enhance their lifestyle.

"Tapping home equity in a timely and appropriate way can keep small budget shortfalls from becoming overwhelming problems," said Barbara R. Stucki, director of the Reverse Mortgage Initiative for NCOA.

The study highlights different options for using home equity:

• Using reverse mortgages to delay the age at which one might begin to collect Social Security, thus boosting the amount of one's ultimate monthly Social Security income.
• As a stopgap measure to consolidate credit card debt, to cover investment losses, or to defer mortgage payments.
• To help people meet expenses if they outlive their savings/retirement income.
• Programs that combine public benefits with modest amounts drawn from home equity to help seniors stay at home.
• Home equity lines of credit for emergency spending, such as home maintenance, without which many homes decay and lose value.
• Reverse mortgages with a line of credit option for borrowers to pay out-of-pocket health and home care expenses. Borrowers pay only the amount they use from the loan.

The report also emphasizes that consumer education must be part of any new efforts aimed at increasing the use of reverse mortgages. It reinforces the value of consumer counseling mandated by the U.S. Department of Housing and Urban Development for the popular Home Equity Conversion Mortgage (HECM) reverse mortgage program.