My Financial Healthcheck

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" .

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 owned by a private company.

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 rates for the HECM program.

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