The more I work with home-equity conversion mortgages - also known as reverse mortgages - offered through the Federal Housing Administration, the more convinced I become that the HECM is the most underutilized financial tool available to consumers in the United States.

It is also more complicated than any other financial instrument, in order to meet a wide diversity of senior adults' needs. But that poses the challenge of matching the individual senior to the appropriate HECM options. Many, if not most, seniors are not up to that challenge on their own, and the available decision support is poor:

The Department of Housing and Urban Development offers virtually none.

Lenders focus on doing deals - whether the option selected is the one that best meets the senior's long-term needs is incidental.

Many retirement planners do not even consider reverse mortgages, and few of those who do have the expertise to advise seniors about which options would work best.

I have tried to fill this gap by writing articles on HECM uses, collecting current price data from a group of lenders, and by developing a calculator (available at http://www.mtgprofessor.com) that allows seniors to explore their options using live price data.

I have begun to realize, however, that my calculator is easy to use for some applications but difficult for others. Ideally, the calculator should have a separate branch for each category of senior needs. Following is an example of this with one well-defined category of senior homeowners.

Jamie R. is 62 and belongs to a rapidly growing category of consumers approaching retirement who have no pension other than Social Security and have paltry savings, but do have significant equity in a home. Because he likely also has a long life ahead of him, Jamie plans to continue working until he reaches 70. At that point, his income will plummet, and Jamie will want to replenish it, at least in part, by drawing funds from a reverse mortgage.

How exactly would he do that?

The best way involves using two HECM options. One is a credit line, which is the right to draw cash for any purpose in an amount up to the total amount of the line. That amount rises over time as long as it is not used.

The second option is a monthly payment, which can be for a specified number of years or could last as long as the borrower resides in the home - called a "tenure payment." A credit line can be used at any time to purchase a monthly payment.

Jamie's best strategy is to take an HECM credit line at 62 and let it sit unused until he stops working and wants income replenishment to kick in. At that point, he would convert the credit line into a tenure payment. During the intervening period, the unused line will grow at a rate equal to the interest rate on his reverse mortgage, plus the mortgage insurance premium of 1.25 percent.

I assumed that Jamie's home was worth $400,000 and that he will want to replenish his income in eight years, on reaching age 70. On May 18, for each of seven price quotes from the lenders who report their HECM prices to my website, I used my reverse-mortgage calculator to estimate Jamie's credit line in eight years, and the tenure payment the line would buy.

The tenure payments were as follows: $1,555; $1,557; $1,640; $1,722; $1,724; $1,748; and $1,979. The range of $424 between the highest and lowest is a reflection of how imperfect the HECM market is.

Would Jamie do just as well if he waited eight years and then took out the reverse mortgage?

Probably not. If his house appreciated 4 percent a year during the eight years, the tenure payment available at that point from the lender offering the best deal would be $1,887 instead of $1,979. The difference is that the unused credit line grew at 5.77 percent during the eight years rather than the 4 percent I assumed for property appreciation.

Obviously, there are scenarios in which home prices rise faster than interest rates, but they are unusual and unpredictable. In most cases, it will not pay to wait.

The bottom line in Jamie's case is the set of tenure payments in Year 8. I was able to find the payments using my calculator, but the casual user probably would have difficulty.

The calculator does not have a separate branch geared explicitly for those looking to replenish future income. But it will soon, as well as branches for other categories of senior need.

Jack Guttentag is professor emeritus of finance at the Wharton School of the University of Pennsylvania. http://www.mtgprofessor.com.