But Speck got her new wheels by tapping the equity in her Rolling Meadows home. Unlike traditional home equity loans, though, hers is known as a reverse equity mortgage or home equity conversion loan, and doesn't have to be repaid any time soon.

Experts say most people either haven't heard of reverse equity mortgages or misunderstand the concept. In a nutshell, a reverse equity mortgage differs from a traditional home equity loan in that it is available only to seniors-typically defined as people aged 62 and older-and is most practical for those who have relatively low incomes. What's more, the reverse loans must be repaid only when the borrower sells his home or dies.

All types of home equity loans are based on the borrower's equity or ownership stake in his home. For instance, if a home is worth $150,000 and the borrower has a mortgage of $30,000, his equity is $120,000, and the lender will grant a loan based on that amount. But in a traditional equity loan, the borrower's income must be substantial enough to repay the loan. Lenders don't even consider a borrower's income in granting a reverse equity mortgage. Rather, lenders look at the value of the home and the age of the borrower.