Reverse Annuity Mortgage – Reverse Mortgage Glossary

Posted by Charles D

February 11, 2009

Reverse annuity mortgage (RAM) is the technically correct term for a reverse mortgage that is paid to the homeowner in the form of an annuity – i.e. a level stream of cash payments over a specified period of time. Modern reverse mortgage products typically have four major payment options:

1. tenure (paid to the homeowner over the homeowner’s life)
2. term (paid to the homeowner in equal installments over a specified period suc as ten years)
3. lump sum (paid to the homeowner in one installment at the start of the loan) and,
4. line of credit (paid to the homeowner in irregular payments as the homeowner decides)

Of these, only reverse mortgages taken with the tenure or term payment options are properly referred to as RAM’s. However, the term is frequently used to refer to reverse mortgages in general.