Reverse Mortgage Loan

Definition

• An arrangement, often used as part of a retirement plan, in which a homeowner can borrow on the equity held in his or her home causing a negative amortization. Homeowners over the age of 60 can borrow up to 40% of the value of their home and receive monthly tax-free payments from a lender. Also called a lifetime mortgage, reverse-annuity mortgage or home equity conversion mortgage.
• A type of loan that allows elderly homeowners to convert built-up equity into cash. The loan comes due if the homeowner sells, moves, or passes away.

Acronyms
RML