Reverse Mortgage Glossary

acceleration clause - the part of a contract that says when a loan may be declared due and payable

adjustable rate - an interest rate that changes, based on changes in a published market-rate index

annuity - a monthly cash payment you get from an insurance company for the rest of your life.

appraisal - an estimate of home value.

appreciation - an increase in a home's value

Area Agency on Aging (AAA) - a local or regional nonprofit organization that provides information on services and programs for older adults

cap - a limit on the amount an adjustable interest rate may go up or down during a specified time period

closing - a meeting where loan documents are signed in order to begin your reverse mortgage.

counseling - to be eligible for a HECM or other Reverse Mortgage, you must discuss the loan with a counselor employed by a nonprofit or public agency approved by the U.S. Department of Housing and Urban Development, (HUD)

condemnation - a court action stating a property is unfit for use: also, the government taking private property to use for the public by the right of eminent domain

credit line - a credit account that allows a borrower to decide when to take money and how much to take; also known as a "line-of-credit" or "credit line."

current interest rate - in the HECM program, the interest rate is tied to either the one-year Treasury or the one-month LIBOR.

deferred payment loans (DPLs) - reverse mortgages that provide a lump sum of cash to repair or improve a home; usually offered by state or local governments

depreciation - a decrease in the value of a home

eminent domain - the right of a government to take private property for public use; for example, taking private land to build a highway

expected interest rate - The expected rate, along with equity and age, determines how much a homeowner receives.

Fannie Mae - a private company that buys and sells mortgages; a government-sponsored business that is supervised by the federal government

Federal Housing Administration (FHA) - the part of the U. S. Department of Housing and Urban Development (HUD) that insures HECM loans

federally insured reverse mortgage - a reverse mortgage is guaranteed by the federal government so you will always receive what the loan promises; also, a Home Equity Conversion Mortgage (HECM)

fixed monthly loan advances - payments of the equal amounts that are made to a borrower each month

home equity - the value of a home, subtracting any money owed against it

home equity conversion - turning home equity into cash without having to leave your home or make regular loan repayments

Home Equity Conversion Mortgage (HECM) - the only reverse mortgage program insured by the Federal Housing Administration, a federal government agency

initial interest rate - One year U.S. Treasuries or one month LIBOR. Harry Gordon will explain both indices and advise which one will better meet your unique situation

leftover equity - the sale price of the home minus the total amount owed on it and the cost of selling it; the amount the homeowner or heirs receive when the house is sold.

loan advances - payments made to a borrower, or to another party on behalf of a borrower

loan balance - the amount owed, including principal and interest; capped in a reverse mortgage by the value of the home when the loan is repaid.

lump sum - a single loan advance at closing

margin - The amount added to the indexed rate to determine the rate charged to the borrower.

maturity - when a loan must be repaid; when it becomes "due and payable"

mortgage - a legal document making a home available to a lender to repay a debt

non-recourse mortgage - a home loan in which the borrower can never owe more than the home's value at the time the loan is repaid

origination - the process of setting up a mortgage, including preparing documents

property tax deferral (PTD) - reverse mortgages that pay annual property taxes; usually offered by state or local governments

proprietary reverse mortgage - a reverse mortgage product offered by a private lender

reverse annuity mortgage - a reverse mortgage in which a lump sum is used to purchase an annuity that gives the borrower a monthly income for life.

reverse mortgage - a home loan that gives cash advances to a homeowner, requires no repayment until a future time, and is capped by the value of the home when the loan is repaid

right of rescission - a borrower's right to cancel a home loan within three business days of the closing

servicing - administering a loan after closing, such as maintaining loan records and sending statements

shared equity - an itemized loan cost based on a percent of a home's value at loan maturity; for example, a 5% shared equity fee on a home worth $200,000 at maturity would be $10,000

Supplemental Security Income (SSI) - a federal monthly income program for low-income persons who are aged 65+, blind, or disabled

tenure advances - fixed monthly loan advances for as long as a borrower lives in a home

term advances - fixed monthly loan advances for a specific period of time

Total Annual Loan Cost (TALC) rate - the projected annual average cost of a reverse mortgage including all itemized costs

T-rate - the rate for U.S. Treasury Securities; used to determine the initial, expected, and current interest rate for some HECM programs

More Questions:

Clarification & explanations for any of these terms, click here for our Info Form .

For your FREE DVD , go to our Contact form. We’ll rush your info to you or call you back ASAP with answers & solutions to your situation.

PPS

Take the first step to make Tomorrow better than Today, Contact Harry, Reverse Mortgage Coach!