A "reverse" mortgage is a loan against your home that you do not have to pay back for as long as you live there. With a reverse mortgage, you can turn the value of your home into cash without having to move or to repay the loan each month. The cash you get from a reverse mortgage can be paid to you in several ways:

• all at once, in a single lump sum of cash;
• as a regular monthly cash advance;
• as a "creditline" account that lets you decide when and how much of your available cash is paid to you; or
• as a combination of these payment methods.

No matter how this loan is paid out to you, you typically don't have to pay anything back until you die, sell your home, or permanently move out of your home. To be eligible for most reverse mortgages, you must own your home and be 62 years of age or older.

FHA mortgage loans are issued by federally qualified lenders and insured by the U.S. Federal Housing Authority, a division of the U.S. Department of Housing and Urban Development.

FHA loans are an attractive option, especially for first-time homeowners:

• Generally easier to qualify for than conventional loans.
• Lower down payment requirements.
• Cannot exceed statutory loan limits.

Conventional loans are mortgage loans offered by non-government sponsored lenders. These loan types include:

• Fixed Rate Loans
• Adjustable Rate Loans (ARMs)
• Combination (Hybrid) Loans
• Balloon Mortgages and Pledge Asset Loans
• Jumbo / Construction Loans
• Reverse Mortgage

Designed to offer long-term financing to American veterans, VA mortgage loans are issued by federally qualified lenders and are guaranteed by the U.S. Veterans Administration. The VA determines eligibility and issues a certificate to qualifying applicants to submit to their mortgage lender of choice. It is generally easier to qualify for a VA loan than conventional loans.

Here's how it works:

• 100% financing without private mortgage insurance or 20% second mortgage.
• A VA funding fee of 0 to 3.3% (this fee may be financed) of the loan amount is paid to the VA.
• When purchasing a home veterans may borrow up to 100% of the sales price or reasonable value of the home, whichever is less.
• When refinancing a home, veterans may borrow up to 90% of reasonable value in order to refinance where state law allows.

With a fixed rate mortgage, the interest rate does not change for the term of the loan, so the monthly payment is always the same. Typically, the shorter the loan period, the more attractive the interest rate will be.

Payments on fixed-rate fully amortizing loans are calculated so that the loan is paid in full at the end of the term. In the early amortization period of the mortgage, a large percentage of the monthly payment pays the interest on the loan. As the mortgage is paid down, more of the monthly payment is applied toward the principal.

A 30 year fixed rate mortgage is the most popular type of loan when borrowers are able to lock into a low rate.

Benefits:

• Lower monthly payments than a 15 year fixed rate mortgage
• Interest rate does not go up if interest rates go up
• Payment does not go up, it stays the same for 30 years

Drawbacks:

• Higher interest rate than a 15 year fixed rate mortgage
• Interest rate stays the same even if interest rates go down

A 15 year fixed rate mortgage allows you to pay off your loan quicker and lock into an attractive lower interest rate.

Benefits:

• Lower interest rate
• Build equity faster
• If interest rates go up, yours is fixed

Drawbacks:

• Higher monthly interest rate stays the same if interest rates go down
• Interest rate stays the same even if interest rates go down

An ARM is a mortgage with an interest rate that may vary over the term of the loan -- usually in response to changes in the prime rate or Treasury Bill rate. The purpose of the interest rate adjustment is primarily to bring the interest rate on the mortgage in line with market rates.

Mortgage holders are protected by a ceiling, or maximum interest rate, which can be reset annually. ARMs typically begin with more attractive rates than fixed rate mortgages -- compensating the borrower for the risk of future interest rate fluctuations.

Choosing an ARM is a good idea when:

• Interest rates are going down
• You intend to keep your home less than 5 years

ARMs have the following distinguishing features:

• Index
• Margin
• Adjustment Frequency
• Initial Interest Rate
• Interest Rate Caps
• Convertibility