Key Terms

Department of Housing and Urban Development (HUD):
The US Department of Housing and Urban Development (HUD) offers the most common type of reverse mortgage HECM, also known as HUD reverse mortgages.
Federal Housing Administration (FHA):
The FHA is the government agency that insures HECM reverse mortgages, also referred to as HUD reverse mortgages.
Fixed Interest Rate:
A loan or mortgage with an interest rate that will remain at a predetermined rate for the entire term of the loan.
Home Equity Conversion Mortgage (HECM):
The HECM is the most common type of reverse mortgage, insured by the Federal Housing Administration (FHA).
Line of Credit Payment Option:
A reverse mortgage payment option that allows the borrower(s) to receive payments at any time and in any amount until the line of credit is exhausted.
Lump Sum Payment Option:
A reverse mortgage payment option that allows the borrower(s) to receive the full amount of the reverse mortgage loan in a single payment.
Primary Residence:
A primary residence is the home that has a homestead exemption filed through the property appraiser’s office and is considered as a legal residence for the purpose of income tax and/or acquiring a mortgage.
Proprietary Reverse Mortgage:
A reverse mortgage that is offered by a private reverse mortgage company.
Reverse Mortgage:
A loan available to seniors aged 62 or older against the equity in a primary residence.
Single Purpose Reverse Mortgage:
A reverse mortgage that is offered by state and local government agencies and/or non-profit organizations.
Tenure Payment Option:
A reverse mortgage payment option that allows the borrower(s) to receive the amount of the loan through equal monthly payments for the remainder of the borrower’s life. Under this payment option, the payments would not stop until the death of the borrower(s) or relocation.
Term Payment Option:
A reverse mortgage payment option that allows the borrower(s) to receive the amount of the loan through equal monthly payments over a specified period of time.
Truth in Lending Act:
A federal law that requires lenders to inform consumers about the terms of a loan and how the costs associated with borrowing are calculated.
Variable Interest Rate:
A loan or mortgage with an interest rate that rises and falls based on the movement of an underlying index of interest rates.