A reverse mortgage is a loan that enables homeowners 62 or older to borrow against the equity in their home without having to sell their home, give up title, or take on a new monthly mortgage payment. The loan proceeds can be used for any purpose, or taken out as a lump sum payment, fixed monthly payment, line of credit, or a combination.

Here's how these loans work, in a nutshell:

The loan amount depends on the borrower's age, current interest rates, and the value and location of the home. A reverse mortgage isn't repaid until the borrower moves out of the home permanently or dies. The house is then sold to repay the loan. The repayment amount can't exceed the value of the home. On the other hand, any equity that remains after the loan is repaidis distributed to the borrower or his or her heirs/estate. A senior's home doesn't have to be owned free and clear to qualify for a reverse mortgage.

A reverse mortgage loan can be issued only on one's primary residence.

As a preliminary matter, it is worth noting that these loans have relatively high fees, and federal law requires the borrower to undergo "loan counseling" (in person or over the phone) to ensure that he or she understands the concept completely.

Reverse mortgage loans can be considered by any senior in need of funds. Because of their high fees, however, reverse mortgage loans may not always be the most effective choice if other options are available.

Reverse mortgages are not available from all banks and mortgage lenders. For a list of lenders in your area, and for further information, see www.reversemortgage.org.