A new option in home equity is becoming available, largely with seniors, but not limited only to families who are free and clear of their mortgages: a reverse mortgage.

With the reverse mortgage, owners pull equity out of their homes without having a house payment, with loans that aren’t due until they sell the house or pass on.  Instead, their lenders are paying them.

The benefits follow: the money is tax free, as it is still considered a loan, there is more cash available for vacations or health needs, there aren’t restrictions on how the money is spent, and it can be received in payments or one lump sum.

The caveats are that they usually come with high interest rates and upfront fees.    The loan is still open to be charged mortgage insurance as well as loan origination fees and other closing costs.

The amount available depends on where the borrowers live and how much equity they have in their house.