Glossary

A provision that allows the lender to demand full repayment of the loan if the borrower fails to meet certain obligations, such as paying property taxes or maintaining the home.

An interest rate that can change over time based on a published market rate index.

An estimate of your home’s current market value, performed by a licensed appraiser.

An increase in the value of your home over time.

Local organizations that provide information and services for seniors, including benefits, housing, and care options.

A limit on how much the interest rate can increase on an adjustable-rate reverse mortgage.

The final step of the loan process where all documents are signed and the funds are disbursed.

Constant Maturity Treasury rate – a common index used to set interest rates on reverse mortgages.

When a government takes private property for public use through eminent domain.

A flexible payment option that works like a revolving line of credit — you can draw funds as needed.

The interest rate currently being charged on the reverse mortgage loan.

Loans that allow borrowers to postpone repayment until a later date, often used for home repairs by seniors.

A decrease in the value of your home over time.

The government’s right to take private property for public use, with fair compensation to the owner.

The interest rate used to calculate how much money you can borrow under a reverse mortgage.

A government-sponsored enterprise that helps provide liquidity in the mortgage market (historically involved in reverse mortgages).

The government agency that insures Home Equity Conversion Mortgages (HECMs).

A reverse mortgage backed by the Federal Housing Administration (most commonly a HECM).

Equal monthly payments received for as long as the borrower lives in the home (also called tenure payments).

The portion of your home’s value that you own free and clear of any mortgage debt.

The process of turning the equity in your home into cash through a reverse mortgage.

The most common type of reverse mortgage. It is insured by the Federal Housing Administration (FHA).

The maximum home value that can be used when calculating the loan amount on a HECM (set by FHA).

The starting interest rate on an adjustable-rate reverse mortgage.

Any remaining equity in the home after the reverse mortgage is paid off.

London Interbank Offered Rate – a former interest rate index previously used on some reverse mortgages (now mostly replaced).

The money you receive from a reverse mortgage (can be lump sum, monthly, or line of credit).

The total amount currently owed on the reverse mortgage, including interest and fees.

Receiving all available loan proceeds in one payment at closing.

The fixed percentage added to the index rate to determine the interest rate on an adjustable-rate reverse mortgage.

When the reverse mortgage becomes due and payable (usually when the last borrower dies, sells the home, or moves out permanently).

Guidelines used by lenders and the FHA to calculate reverse mortgage loan amounts and costs.

A loan secured by real estate. A reverse mortgage is a special type of mortgage for seniors.

A loan in which the borrower (or their heirs) will never owe more than the value of the home when it is sold.

The process of applying for and closing a mortgage loan. The lender may charge an origination fee.

Programs that allow seniors to delay paying property taxes until they sell the home or pass away.

A reverse mortgage offered by a private lender that is not insured by the FHA (usually for higher-value homes).

A loan that allows homeowners age 62 and older to convert part of their home equity into cash without making monthly mortgage payments.

The legal right to cancel a reverse mortgage within three business days after closing without penalty.

The ongoing management of the loan after closing, including sending statements and handling payments of taxes and insurance.

A federal program that provides monthly payments to low-income seniors and disabled individuals. Reverse mortgage proceeds can affect SSI eligibility.

Equal monthly payments that continue for as long as the borrower lives in the home as their primary residence.

Fixed monthly loan advances for a specific period of time chosen by the borrower.

The projected annual cost of the reverse mortgage, including interest and all fees, expressed as a percentage. Required disclosure by the government.