Reverse Mortgage Terms A-F
Acceleration clause -The part of the 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
Appraisal - An estimate of how much a house would sell for if it were sold; also called its market 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 documents are signed to "close the deal" on a mortgage; the time a mortgage begins
CMT Rate - The Constant Maturity Treasury rate, used as an interest rate index in the HECM program
Condemnation - A court action saying a property is unfit for use: also, the government taking private property to use for the public by the right of eminent domain
Creditline - 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, which equals one of the HUD-approved interest rate indices (1-month CMT, 1-year CMT, or 1-month LIBOR) plus a margin
Deferred Payment Loans (DPLs) - Reverse mortgages that give you 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 - In the HECM program, the interest rate used to determine a borrower's loan advance amounts; it equals either the 10-year CMT or the 10-year LIBOR rate plus a margin (see below)
Fannie Mae - 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)
Fixed Monthly Loan Advances - payments of the same amount that are made to a borrower each month
(continue on to Reverse Mortgage Terms G-Z)...