What is a reverse mortgage? A reverse mortgage is a special type of home loan that lets a homeowner convert the equity in his or her home into cash while continuing to live in their home. A reverse mortgage can give older Americans greater financial security to supplement social security, meet unexpected medical expenses, make home improvements, or whatever they choose. It's not surprising that reverse mortgages are becoming more and more popular all across the nation.

The Department created one of the first reverse mortgage programs, and it's of special interest to low- and moderate-income seniors. Homeowners 62 and older who have paid off their mortgages or have only small mortgage balances remaining are eligible to participate in HUD's reverse mortgage program. The program allows homeowners to borrow against the equity in their homes.

Homeowners can receive payments in a lump sum, on a monthly basis (for a fixed term or for as long as they live in the home), or on an occasional basis as a line of credit. Homeowners whose circumstances change can restructure their payment options.

Unlike ordinary home equity loans, a HUD reverse mortgage does not require repayment as long as the borrower lives in the home. Lenders recover their principal, plus interest, when the home is sold. The remaining value of the home goes to the homeowner or to his or her survivors. If the sales proceeds are insufficient to pay the amount owed, HUD will pay the lender the amount of the shortfall. The Federal Housing Administration, which is part of HUD, collects an insurance premium from all borrowers to provide this coverage.

For additional information for yourself, a family member or a friend, check out the "Top Ten Things to Know if You're Interested in a Reverse Mortgage."