Reverse mortgages are becoming increasingly popular in the United States. The U.S. Department of Housing and Urban Development (HUD) created one of the first federally-insured reverse mortgage programs that can help seniors achieve greater financial security. However, those considering reverse mortgages should be careful to make sure they act prudently.

1. What is a reverse mortgage? A reverse mortgage is a special type of home loan that lets a homeowner convert some or all of the equity in their home into cash. Unlike traditional home equity loans, this money does not need to be repaid until the borrow no longer uses the home as their principal residence. Most often, this occurs when the homeowner passes away.
   
2. How do I qualify for a HUD reverse mortgage? The HUD Federal Housing Administration requires that borrowers are 62 years of age or older, own their home outright (or have a low mortgage balance), and must live in the home. Those interested in obtaining a reverse mortgage must also contact a HUD-approved counselor for a brief consultation. Call 1-800-569-4287.
   
3. What types of homes are eligible for a reverse mortgage? Single family dwellings and two-to-four unit properties that you own and occupy are automatically eligible for reverse mortgages. Moreover, some townhouses, detached homes, condominium units, and manufactured homes are also eligible.
   
4. Can the lender take the home away if the loan is outlived? No, you do not need to repay the loan as long as you or one of the borrowers continues to live in the house and keeps the taxes and insurance current. You can never owe more than your home’s value.
   
5. How are payments sent? There are five options for receiving reverse mortgage payments: (1) equal monthly payments, (2) unscheduled payments via a line of credit, and (3) a combination of scheduled monthly payments and a line of credit.