Definition
A loan available to homeowners aged 62 or older that converts home equity into cash payments without requiring monthly mortgage payments. The most common type, the Home Equity Conversion Mortgage (HECM), is insured by the FHA. The loan balance grows over time as interest accrues, and repayment is required when the homeowner sells, moves permanently, or passes away. The borrower must maintain property taxes, insurance, and home maintenance.
Related Mortgage Terms
- Equity
The difference between your home's current market value and the remaining mortga...
- FHA Loan
A mortgage insured by the Federal Housing Administration (FHA), designed for bor...
- HELOC
A Home Equity Line of Credit (HELOC) is a revolving credit line secured by your ...
- Amortization
The process of paying off a mortgage through regular monthly payments of princip...
- Annual Percentage Rate (APR)
The total annual cost of a mortgage expressed as a percentage, including the int...
Understanding mortgage terminology helps you compare loan offers and make informed decisions. Use our mortgage calculator to see how these terms affect your monthly payment.