Reverse mortgages, also known as FHA Home Equity Conversion Mortgages (HECM) in the United States, are growing in popularity among the senior set. With this type of plan, homeowners who own their home outright or have a very small mortgage payment can actually receive cash from the home that doesn't require immediate payback. This money can be used for improvements, medical expenses or to supplement social security.
Over time your home is worth money thanks to increased value gained over the years. This is called equity. With a reverse mortgage, a homeowner age 62 or older qualifies to receive a percentage of the equity as cash payments. Unlike a home equity loan or second mortgage, however, the loan does not have to be paid back as long as the you or another borrower is living in the residence as a primary home. You are still required to pay property tax, home insurance and other monthly utility payments, etc.