(MONEY Magazine) – Lately, more and more older home- owners are turning to reverse mortgages to supplement their retirement income. Think of a reverse mortgage as a spigot that allows you to pour your home equity into your pocket. You receive the money in fixed monthly payments, in one lump sum or as a line of credit. The Faustian bargain: When you move or die, the lender taps the proceeds first to recapture the money it advanced you, up to the value of your home. The guarantee of a regular check in retirement convinced the Bolings of Thornton, Colo. (pictured at right) to take out a reverse mortgage on their $93,500 house in June. Maggie, 73, and Howard, 74, now get a welcome $303 a month. "I feel like we're robbing the bank," laughs Maggie.

Although reverse mortgages have been marketed since the early '80s, they've recently become more popular and easier for homeowners to evaluate. In January, the Federal National Mortgage Association made available its reverse mortgage, which lets homeowners tap up to $207,000 of their equity, far more than the $155,250 limit maintained by the U.S. Department of Housing and Urban Development. In March, President Clinton and Congress began letting people apply for HUD's reverse mortgages if they own two- to four-unit properties and live in one. In addition, a year-old federal law requires lenders to show the total annual average cost of their reverse mortgages in writing, so you can easily see which ones offer the best deals.

The money isn't free, of course. The cost of a reverse mortgage depends on a variety of factors, including the amount you borrow, the length of the loan and the value of your home. The Bolings, for example, paid $4,660. Lenders also take your life expectancy into account when they calculate how much you'll get--the older you are, the better the deal is for you. For example, a HUD reverse mortgage on a $150,000 home might let a 65-year-old receive $549 a month. A 75-year-old in the same town could get $728.

Obviously, these plans are not for everyone. So before signing up or suggesting one to your parents, you should follow these three steps:

--Take time to bone up on how they work. These loans can be mighty complicated (you thought car leases were tricky?). "You're not likely to get the best deal if you're forced to make a decision under pressure," notes Bronwyn Belling, a reverse-mortgage specialist at the American Association of Retired Persons. For a detailed explanation of reverse mortgages, get Your New Retirement Nest Egg by Ken Scholen (NCHEC Press, $24.95; 800-247-6553).

--Comparison shop. Notes Scholen: "The difference in what you'd receive from two lenders could be as much as $30,000." If your place is worth more than $207,000, you'll probably get the best deal from private lenders. For the names of lenders making reverse mortgages in your area, download the AARP's list (http://www.aarp.org).

--Talk it over with your financial advisers and family. Parents should run the idea by their kids. Though you may assume they'll object to depleting the home equity, they may surprise you. At least half of the 100,000 calls AARP gets about reverse mortgages each year are from adults inquiring for their parents. "We were concerned the kids would think we were cheating them out of their inheritance," says Maggie Boling. "But they said, 'If it'll help you out, go for it.'"