What type of mortgage arrangement allows an elderly homeowner to receive funds against their home equity?

The correct choice is reverse mortgage. This type of mortgage arrangement is specifically designed for elderly homeowners, typically aged 62 or older, allowing them to convert part of their home equity into cash. The primary benefit of a reverse mortgage is that it enables seniors to access funds for living expenses, healthcare, or other needs without having to sell their home or make monthly payments, as would be the case with other types of mortgages. Instead, the loan amount is repaid when the homeowner sells the home, moves out, or passes away, making it a valuable financial tool for those looking to utilize their home equity while continuing to live in their property.

In contrast, fixed mortgages, adjustable-rate mortgages, and conventional mortgages typically require the borrower to make monthly payments and do not provide a means to access home equity in the way a reverse mortgage does. These types of mortgages are primarily constructed for purchasing homes rather than for tapping into the equity of an existing home.