REVERSE ANNUITY MORTGAGE LOANS (RAM) - PRIVATE LENDERS

WHAT IS A REVERSE ANNUITY MORTGAGE?

Reverse Annuity Mortgage (RAM) loans offered by private lenders in Connecticut enable elderly home owners to trade the equity in their homes for monthly or lump sum payments or a line of credit. Unlike regular home equity loans, the borrower does not make monthly payments to the lender. Instead, the lender makes monthly payments to the borrower, though lump sum loans or lines of credit can sometimes also be arranged (and the borrower will still not need to make monthly payments.) The house remains in the elderly home owner's name. He or she receives this income until death, sale of the property or the inability to live in the house for a period exceeding 12 consecutive months. At that time the home must be sold to repay the debt. If the loan balance exceeds the value of the property, the estate will owe no more than the value of the property.

WHO IS ELIGIBLE?

• Ages 62+, 65+, or 70+ depending on which lender is chosen
• Other restrictions

COST:

There is interest paid on the loan; however, the interest is taken from the home equity and not from the lender during the period of the loan.

HOW TO APPLY?

RAMs involve important decisions and can be complicated. It is recommended that anyone contemplating using a RAM to generate income call the Elderly Services Division at the Connecticut Department of Social Services (DSS) to consult with an information and referral specialist to explore the wisdom of taking a RAM from a private lender.

• It is important that homeowners consider their plans carefully and get appropriate advice from an attorney, accountant, or other reliable, professional source before making a decision.
• More information can be obtained by contacting the DSS Aging Services Division in Hartford: (www.ct.gov/agingservices/cwp/view.asp?a=2515&q=313094)
  DSS educates older persons about home equity conversions and possible alternatives to home equity conversion and has information on state-approved equity conversion programs.

Further information can also be found in the booklet: "Money From Home: A Guide to Understanding Reverse Mortgages" posted on the Fannie Mae website: www.fanniemae.com/global/pdf/homebuyers/moneyfromhome.pdf

TO FIND PROVIDERS IN CONNECTICUT'S COMMUNITY RESOURCES DATABASE:
Search by service name: Reverse Mortgage Programs

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SOURCES:  Connecticut Department. of Social Services, Aging Services Division; "Money From Home: A Guide to Understanding Reverse Mortgages" posted on the Fannie Mae website
PREPARED BY: 211/pt
CONTENT LAST REVIEWED: November2012