Known
as Reverse Annuity Mortgages (RAMs)
these instruments are gaining popularity
with older homeowners who want to use
the equity in the home to supplement
their income.
Lender
Makes Monthly Payments
the RAM is a special type of loan
that works in reverse — the lender
makes monthly payments to you based
on the equity of your home.
•
Use
for Living Expenses
the money from a RAM can be used for
anything — living expenses, medical,
travel, education, home improvements,
consolidation of debt, health care,
investments, and other.
•
Qualifications to qualify you must be at least
62 and own your own home or condominium.
There are no income or medical requirements.
The lender will
appraise the home value and make a home
loan based upon a percentage of the current
value.
The homeowner retains ownership. The lender
will then allow you one of four payment
options:
lump-sum payment
equal monthly annuity payments
to the homeowner for up to the amount
of equity in the home. The number
and schedule payments depend on the
equity in the home and age of the
recipient.
an equity line of credit that the
borrower can draw upon as needed
combination of annuity payments
and equity line
No payments will
be required as long as the borrower remains
in the home.
RAMs do not have to be repaid until the
borrower moves, sells, refinances the
property or dies. If the property is sold,
any remaining proceeds after the mortgage
is paid off is distributed to the homeowner
(or next of kin).
The advantage of
the RAM
the homeowner receives
tax-free income each month.
The disadvantage of
the RAM
the home owner
is drawing down on their home equity.
If the homeowner wants to move or sale
their house, there may not be enough equity
in the home after a number of annuity
payments have been paid.
equal monthly annuity payments
to the homeowner for up to the amount
of equity in the home. The number
and schedule payments depend on the
equity in the home and age of the
recipient.
an equity line of credit that the
borrower can draw upon as needed
combination of annuity payments
and equity line
No repayments will be required as
long as the borrower remains in the
home.
HECMs must be obtained
from HUD-approved lenders.
Borrowers must first meet with an approved
HUD counselor to review the RAM product
before submitting an application.
Note: The loan information above is general information related to mortgage products and the mortgage lending process. The information does not represent terms of any particular lender. Lenders whom you may work with may offer different product terms.
PickMyMortgage.com is not a lender. Therefore, we cannot quote rates or guarantee best terms. We refer applicants interested in getting a lending quote to Secure Rights, a licensed mortgage broker representing mulitple lenders.
