203-b limit – the dollar limit in each county for how much of an Oregon home’s value can be used to determine the amount of money you can get from a federally insured HECM reverse mortgage; the name comes from Section 203-b of the National Housing Act
Model Specifications – rules recommended for analyzing and comparing reverse mortgages
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 much a house in Oregon 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
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; it equals the one-year rate for U.S. Treasury Securities, plus a margin (see below)
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 an Oregon 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 the 10-year rate for U.S. Treasury Securities, 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
Home Equity – the value of a home, subtracting any money owed on 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 – 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
Leftover Equity – the sale price of your Oregon 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.
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 – 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 Recission – 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-Bill 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