Probate, Estate and Elder Law Glossary Terms

A term referring to a variety of plans designed to help older homeowners use the equity in their homes without requiring them to move. The three main types are: sale-leaseback, reverse mortgages, and deferred payment loans. Home Equity Conversion Mortgages (HECM) are federally-insured reverse mortgages where the FHA determines the amount HECM lenders can loan to individuals based on the age of the individuals, the value of their homes, and the current expected rate. Fees associated with these loans are limited by the FHA, which insure these loans against late payments or loss to the borrower or their estate. These loans generally provide the largest loan advances for borrowers whose properties are under $600,000 and offer a variety of ways on how the money can be paid to recipients including a lump sum, line of credit or monthly payments. There are generally no restrictions on how money from these loans can be used; however, a reverse mortgage cannot be used to purchase an annuity. HECMs also allow lifetime payments or higher payments for a selected period of time and are paid upon sale of the property. The origination fees and closing costs associated with the mortgage are paid when the loan is paid off. Applicants are required to discuss the loan Connecticut also allows the Reverse Annuity Mortgages (RAM) program offered by the Connecticut Housing Finance Authority and Proprietary Reverse Mortgages offered by banks, mortgage companies and other private lenders. Eligibility, costs, loan terms and conditions associated with each type may be different. It is important for homeowners to consider all the options carefully and to obtain advice from an attorney, financial advisor, housing counselor or other reliable professional before deciding whether a reverse mortgage is appropriate and which reverse mortgage is right for them.