Reverse mortgage
A loan for homeowners 62 and older that turns equity into cash without monthly mortgage payments. The balance grows over time and is usually repaid when the owner sells, moves out or dies. Taxes and insurance must still be paid.
Also called: HECM, home equity conversion mortgage
Related terms
The part of a property's value you own outright: its market value minus what you owe on loans against it. Equity grows as you pay down the loan and as the property gains value.
A revolving credit line secured by your home, which you can draw on and repay as needed. Rates are usually variable, and it typically sits behind the first mortgage as a second lien.
A mortgage insured by the Federal Housing Administration, allowing low down payments and more flexible credit standards. Borrowers pay an upfront and annual mortgage insurance premium, and loan amounts are capped by county.
A yearly tax set by local governments based on a property's assessed value. Lenders usually collect it monthly through escrow, and rates vary widely by location.
A policy covering the home and belongings against damage such as fire or wind, plus liability. Lenders require it before closing. Standard policies do not cover flood, and often not earthquake.