reverse annuity mortgage
–noun | a type of home mortgage under which an elderly homeowner is allowed a long-term loan in the form of monthly payments against his or her paid-off equity as collateral, repayable when the home is eventually sold. Abbreviation: RAM |
Financial Dictionary
reverse annuity mortgage
- A mortgage in which a homeowner's equity is gradually depleted by a series of payments from the mortgage holder to the homeowner. Thus, a reverse annuity mortgage increases in size as the annuity payments continue. A reverse annuity mortgage is used primarily by elderly homeowners who wish to convert the equity in their homes into a stream of retirement income payments.
Wall Street Words: An A to Z Guide to Investment Terms by David L. Scott.
Copyright © 2003. Published by Houghton Mifflin.
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