Reverse Mortgage Glossary

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AARP - American Association of Retired Persons.

Adjustment date - the date that the interest rate changes on an adjustable-rate mortgage (ARM).

Adjustment period - the period elapsing between adjustment dates for an adjustable-rate mortgage (ARM).

Adjustable rate - an interest rate that changes, generally based on changes in a published market-rate index. The LIBOR market-rate index is an example.

Advances -

Amortization - the gradual repayment of a mortgage loan, both principal and interest, by installments; this is not used with reverse mortgages.

Annual Percentage Rate (APR) - the cost of credit, expressed as a yearly rate including interest and mortgage insurance and loan origination fees. This allows the buyer to compare loans, however APR should not be confused with the actual note rate. The APR on a Reverse Mortgage can be difficult to understand.

Annuity - a monthly cash payment that you can get from an insurance company for the rest of your life. You can get a monthly check for life or a defined length of time from a reverse mortgage as well.- Reverse Mortgage Glossary

Appraisal - an estimate of how much a house or home would sell for if it were sold: also called or known as its' market value. For reverse mortgages these are strictly regulated and are difficult to disbute. (Reverse Mortgage Glossary)

Appreciation - an increase in a house or home's value. Also see "Appraisal" in this reverse mortgage glossary.

Assignment - the transfer of a mortgage from one company to another. This can be done if you are working with a lender that is not taking care of you during the loan process.- Reverse Mortgage Glossary

Assumability - reverse mortgages are not assumable. They can be refinanced however. (Reverse Mortgage Glossary)

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Broker - an individual or company that brings borrowers and lenders together for the purpose of loan origination. Brokers often can provide the lowest cost loans because they can choose from the best of several different Bank loan programs. (Reverse Mortgage Glossary)

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

Certificate of Counseling - a document that is issued by a FHA approved counseling service company after a borrower has completed Reverse Mortgage Counseling.

Closing - a meeting where documents are signed to "close the deal" on a mortgage loan; the time when a mortgage begins.

Closing Costs - normally include an origination fee, mortgage insurance, property taxes, charges for title insurance, recording fees and appraisal fees.

Consumer Reporting Agency (Credit Bureau) - an organization that handles the preparation of reports used by lenders to determine a potential borrower's credit history and other information from public records.

Counseling - Counseling is required before you get a reverse mortgage or HECM loan.

Couseling Agency - An agency approved to perform required reverse mortgage counseling.

Credit Report - a report that details an individual's credit history that is prepared by a credit bureau and used by a lender to determine if any federal liens exist against a Reverse Mortgage borrower. Credit score is generally not a factor when qualifying for a reverse mortgage loan. (Reverse Mortgage Glossary)

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

Current interest rate - in the HECM program, the interest rate currently being charged on a loan; it equals the one-year rate for U.S. Treasury Securities, plus a margin (see below).

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Deferred payment loans (DPLs) - reverse mortgages that give a lump sum of cash to the borrower to repair or improve a home; usually offered by state or local governments.

Depreciation - a decrease in the value of a house or home.

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Expected interest rate - in the HECM program, the interest rate used to determine a borrower's loan advance amounts; it equals the 10-year rate for U.S. Treasury Securities, plus a margin

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Fannie Mae - (FNMA) a private company that buys and sells mortgages; a government-sponsored business that is watched over 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 guaranteed by the federal government so you will always get what the loan promises; also, a Home Equity Conversion Mortgage (HECM).

Federal Liens - Federal liens against a property or borrower must be paid before a Reverse Mortgage is closed or paid from the Reverse Mortgage proceeds.

FHA -

First Mortgage - the primary lien against a property.

Fixed monthly loan advances - payments of the same amount that are made to a borrower each month.

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GFE -

Government Backed - Most reverse mortgages are government backed.

Government Insured - Most reverse mortgages are government insured (Reverse Mortgage Glossary).

Government Regulated - Most reverse mortgages must comply with government regulations.

Glossary - Reverse Mortgage Glossary of terms.

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Homekeeper - Fannie Mae's reverse mortgage product that allows a borrower to use a reverse mortgage to purchase a home. Home equity - the value of a home, subtracting and money owed on it.

Home equity conversion - turning home equity into cash without having to lease 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.

HELOC - Home Equity Line of Credit

HUD -

HUD-1 Statement - a document that provides an itemized listing of the funds that are payable at the loan closing.

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Index - the index is the measure of interest rate changes a lender uses to decide the amount an interest rate on an ARM will change over time; Reverse Mortgage rates are tied to the U.S. Treasury rates.

Initial interest rate - in the HECM program, the interest rate that is first charged on the loan beginning at closing; it equals the one-year rate for U.S. Treasury Securities, plus a margin.

Interest Rate Ceiling - for an adjustable-rate mortgage (ARM), the maximum interest rate as specified in the mortgage note.

Interest Rate Floor - for an adjustable-rate mortgage (ARM), the minimum interest rate as specified in the mortgage note.

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Jumbo Reverse Mortgage - A reverse mortgage outside of the government program guidelines that considers property values above $625,500.

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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 get when the house is sold.

LIBOR - London Inter-Bank Offer Rate, a market-rate often used to set adjustable rate reverse mortgages.

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.

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Margin - in the HECM program, the amount added to the one-year Treasury rate to determine the initial and current interest rates, and to the 10-year Treasury rate to determine the expected interest rate.

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

Medi-Cal -

MIP -

Modified Tenure Payment -

Mortgage - a legal document that pledges a property to a lender as security for repayment of a debt.

Mortgage Banker - a company that originates mortgages exclusively for resale in the secondary mortgage market. Mortgage Broker - an individual or company that brings borrowers and lenders together for the purpose of loan origination.

Mortgagee - the party to a mortgage who makes the loan.

Mortgagor - the borrower in a mortgage agreement.

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NRMLA -

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).

Note - a legal document that obligates a borrower to repay a mortgage loan.

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

Origination fee - a fee paid to the lender for originating and processing a loan application. The origination fee is stated in the form of points; two points equals two percent of appraised value, maximum claim amount or adjusted loan amount for Reverse Mortgages.

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Pre-Approval - the process of determining how much money you will be eligible to borrow before you apply for a loan.

Principal Lending Limit -

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

Proprietary reverse mortgage - a reverse mortgage product owned by a private company.

PUD -

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Quote - To state (a price) for securities, goods, or services.

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Reverse Mortgage Definiton - See Reverse mortgage definitions here Reverse Mortgage Glossary Definition (Click Here)

Reverse Mortgage Glossary - Reverse mortgage glossary of terms.

Real Estate Settlement Procedures Act (RESPA) - a consumer protection law that requires lenders to give borrowers advance notice of closing costs.

Recording - the noting in the county registrar's office of the details of a properly executed legal document, such as a deed, a mortgage note or a satisfaction of mortgage, thereby making it a part of the public record.

Refinance - paying off one loan with the proceeds from a new loan using the same property as security. 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 recission - a borrower's right to cancel a home loan within three business days of the closing.

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Set Aside - amounts taken from loan amount and set aside for future costs of servicing, paying taxes or insurances. Start Rate - one year U.S. Treasury Security weekly index plus mortgage rate margin (determined by lender/Fannie Mae).

Secondary Mortgage Market - where existing mortgages are bought and sold. Servicing - administering a loan after closing, such as maintaining loan records and sending statements. Loan servicing...

Shared equity - shared equity programs are no longer available (Aug 03).

SSI -

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

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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 rates for the HECM program.

Treasury Rate - See "T-rate" above in this reverse mortgage glossary.

Truth-in-Lending - a federal law that requires lenders to fully disclose, in writing, the terms and conditions of a mortgage, including the annual percentage rate (APR) and other charges.

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Underwriting - the process of evaluating a loan application to determine the quality of the property and the amount a borrower may borrow.

Uninsured reverse mortgage - a reverse mortgage that becomes due and payable on a specific date.

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YMT -

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