If you are age 62 or older, own your home, and need cash to pay for long-term care or other expenses, a reverse mortgage may help increase your cash flow. But since your home is such a valuable asset, you should first consult with your attorney or financial advisor before applying so you will know your rights and responsibilities, minimize your financial risks, and avoid the loss of your home.

Today, there are three plans available: FHA-insured loans, lender-insured loans, and uninsured. Since each plan differs, you should choose the plan that meets your financial needs.

Reverse mortgages are types of home equity loans that allow you to convert some of the equity in your home into cash while you retain home ownership. Unlike regular mortgages, rather than making payments each month, you will receive payments.

All three plans (FHA-insured, lender-insured, and uninsured) charge origination fees and closing costs. Insured plans also charge insurance premiums. Some plans impose mortgage-servicing charges. You may be allowed to finance these costs so you will not have to pay for them up front, but they will be added to your loan amount and will draw interest.

Most reverse mortgages do not require repayment of principal, interest, or servicing fees so long as you live in your home. Cash received from a reverse mortgage can be used for any purpose.

To qualify, you must own your home. The funds can be paid to you in a lump sum, in monthly advances, through a line-of-credit, or in a combination, all depending on the type of reverse mortgage and the lender. The amount you can borrow is based on your age, the equity in your home, and the interest rate the lender is charging.

Because you retain title to your home, you remain responsible for taxes, repairs, insurance, and maintenance. Depending on the plan you may choose, your balance becomes due with interest when you permanently move, sell your home, die, or reach the end of the agreed loan term. At your death, the lender does not take title to your home, but your heirs must pay off the loan. This debt may be repaid by refinancing the loan into a regular mortgage.

Reverse mortgages are rising-debt loans, that is, the interest is added to the principal loan balance each month since it is not paid on a current basis. Thus, the total amount of interest you owe increases significantly with time as the interest compounds.

You will use up some or all of the equity in your home if you choose a reverse mortgage, meaning that there will be less for you and your heirs.

You may be able to get a lump sum up front that will be more than your remaining payments.

Your responsibility to repay is limited to the value of your home at the time the loan is repaid, and could include appreciation after your loan begins.

Loan payments to you are nontaxable and do not affect your Social Security or Medicare benefits. If you receive Supplemental Security Income, reverse mortgage proceeds may not affect your benefits as long as you spend them within the month you receive them. This may be true for Medicaid benefits. However, you should always check with a knowledgeable lawyer before you enter this arrangement.

Your plan may provide for fixed or variable interest rates. Interest paid is not deductible for income tax purposes until you pay off all or part of your debt.

FHA-insured mortgages offer several payment options. You may receive monthly loan advances for a fixed term or for as long as you live in the home, a line of credit, or monthly loan advances plus a line of credit. The debt is not due as long as you live in your home. With the line of credit option, you may draw amounts as you need them over time. Closing costs, a mortgage insurance premium and sometimes a monthly servicing fee is required. Interest is charged at an adjustable rate on your loan balance; any interest rate changes do not affect the monthly payment, but rather how quickly the loan balance grows over time.

You may change payment options at little cost, and you are protected since the loan advances will continue to be made to you even if a lender defaults. However, FHA-insured plans may provide smaller loan advances than lender-insured plans and have higher costs than uninsured plans.

Lender-insured plans offer monthly loan advances or monthly loan advances plus a line of credit for as long as you live in your home. Interest may be assessed at a fixed rate or an adjustable rate, and additional loan costs can include a fixed or variable mortgage insurance premium and other loan fees.

Loan advances may be larger than those provided by FHA-insured plans, and you may be able to mortgage less than the full value of your home, thus preserving home equity for later use by you or your heirs. These loans may involve greater loan costs than FHA-insured, or uninsured loans. Higher costs mean that your loan balance grows faster, leaving you with less equity over time.

Some lender-insured plans include an annuity that continues making monthly payments to you even if you sell your home and move. The security of these payments depends on the financial strength of the company providing them, so be sure to check the financial ratings of that company. Annuity payments may be taxable and affect your eligibility for Supplemental Security Income and Medicaid. These "reverse annuity mortgages" may also include additional charges based on increases in the value of your home during the term of your loan.

Uninsured reverse mortgages provide monthly loan advances for a fixed term only -- a definite number of years that you select when you first take out the loan. Your loan balance becomes due and payable when the loan advances stop. Interest is usually set at a fixed interest rate and no mortgage insurance premium is required. If you consider an uninsured plan, you must think carefully about the amount of money you need monthly; how many years you may need the money; how you will repay the loan when it comes due; and how much remaining equity you will need after paying off the loan.

If you have short-term but substantial cash needs, the uninsured plan may provide a greater monthly advance than the other plans. However, because you must pay back the loan by a specific date, it is important for you to have a source of repayment. If you are unable to repay the loan, you may have to sell your home and move.

The Federal Truth in Lending Act requires lenders to inform you about the plan's terms and costs. So, be sure you understand them before signing. Among other information, lenders must disclose the Annual Percentage Rate (APR) and payment terms. On plans with adjustable rates, lenders must provide specific information about the variable rate feature. On plans with credit lines, lenders also must inform you of any charges to open and use the account, such as an appraisal, a credit report, or attorney's fees.