Reverse mortgages are one way people who own their homes may be able to tap the equity they've built up.

With a reverse mortgage, a bank or other lender sets the amount that you, the homeowner, can borrow. But instead of repaying the lender a fixed amount each month until the loan is paid off and you own the home -- as you would with a regular mortgage -- just the opposite happens: The lender gives you money against the equity in your home, either on a fixed schedule over a period of years or as often as you need it. In other words, you gradually give up ownership of your home in return for cash.

The long-term effect is the reverse of a regular mortgage, too. With a regular mortgage, you build up your equity each time you make a payment. But with a reverse mortgage, your equity decreases each time the lender gives you money.

Because a reverse mortgage is a loan, just the way a regular mortgage is, the lender charges you interest. Sooner or later the lender will want back not only the full amount of the loan, or principal, but also the interest that has built up on the amount you borrowed. In most agreements, the loan amount plus interest is paid off after you die, usually by selling your home.

With a regular mortgage you build up your equity each time you make a payment to the lender. With a reverse mortgage you borrow against your equity, reducing your ownership share each time you receive a payment.

If you sign an agreement that covers a fixed number of years instead of your lifetime, you could still be alive when the loan ends. With the equity in your home used up, you might not be able to afford to go on living there. The same could happen to your surviving spouse, unless the agreement specifically covers both your lifetimes. And once you move out, the loan generally comes due.

One of the advantages of government-insured reverse mortgages is that repayment is never due while you (or your spouse) is still living in the house. But that doesn't solve the problem of what happens if you are forced to move out because you can no longer afford to live there or if you aren't physically able to manage the upkeep.

And if you decide to move after you've agreed to a reverse mortgage, you'll have to pay back all the money you've received, plus interest, closing costs on the loan, and any appreciation in the value in the house. That would probably use up most of what you could sell your house for -- and maybe more.

Despite their potential advantages, the rates on reverse mortgages tend to be high -- something you should watch for when negotiating any agreement.

If you decide to take a reverse mortgage, you'll begin getting your money according to the terms you agree to. Here are the different types, listed in order of popularity:

• Lines of credit, which let you take money from your reverse mortgage account as you need it, usually by writing a check against the available amount
• Regular monthly payments, which are the most like a regular mortgage, but in reverse
• Lump sum payments, in which you get the total amount of the loan at one time