Reverse Mortgage Glossary

Appraisal

An independent professional opinion of your home’s market value, used to determine how much you can borrow.

A spouse under 62 who isn’t on the loan but has protections allowing them to remain in the home after the borrower passes away.

HECM (Home Equity Conversion Mortgage)

The FHA-insured reverse mortgage, the most common type in the country. Pronounced “heck-um.”

HUD

The U.S. Department of Housing and Urban Development, which oversees the HECM program.

Initial Principal Limit

The total amount of money available to you at closing, based on your age, home value, and interest rates.

Jumbo / Proprietary Reverse Mortgage

A privately backed reverse mortgage for higher-value homes that exceed the HECM lending limit. Common in higher-value markets like California.

Line of Credit Growth

A feature of the HECM line of credit: the unused portion grows over time, increasing the funds available to you later.

Maturity Event

An event that makes the loan due, such as selling the home, moving out permanently, or the last borrower passing away.

MIP (Mortgage Insurance Premium)

The FHA insurance on a HECM. It’s what guarantees you’ll never owe more than the home is worth.

Non-Recourse Loan

A loan where the home is the only collateral. Neither you nor your heirs can ever owe more than the home’s value.

Occupancy Requirement

The rule that the home must remain your primary residence for the loan to stay in good standing.

Origination Fee

The lender’s fee for processing your loan, capped by federal rules on HECMs.

Principal Limit

The maximum loan proceeds available to you, which can grow over time on the line of credit option.

Right of Rescission

Your right to cancel the loan within three business days after closing, for any reason.

Servicer

The company that manages your loan after closing, sends statements, and handles disbursements.

Tenure Payments

Equal monthly payments for as long as you live in the home as your primary residence.

Term Payments

Equal monthly payments for a fixed period you choose.

Title

Legal ownership of your home. With a reverse mortgage, the title stays in your name.

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