|
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
Appraised Value
The estimated value of a home established by a professional who has a knowledge of real estate prices and markets.
Appreciation
An increase in a home's value
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
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
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
Home value limit
In the HECM program, the largest home value that can be used to determine a borrower’s loan advances
Initial interest rate
In the HECM program, the interest rate that is first charged on the loan beginning at closing; it equals one of the HUD-approved interest rate indices (1-month CMT, 1-year CMT, or 1-month LIBOR) plus a margin
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
The London Interbank Offered Rate, used as an interest rate index in the HECM program
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
|
