Reverse Annuity Mortgage Loans (RAM) – Private Lenders

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What is a Reverse Annuity Mortgage?

Reverse Annuity Mortgage (RAM) loans offered by private lenders in Connecticut enable elderly home owners to receive money as a loan secured against the equity of their home. Unlike regular home equity loans, the borrower does not make monthly payments to the lender. Instead, the lender pays the borrower in a lump sum, through a line of credit, or as monthly payments. The house remains in the home owner’s name and he or she receives this income until death, sale of the property, or the inability to live in the house for up to 12 consecutive months. At that time the borrower or his/her estate must settle the loan, either by repaying the balance or selling the house to repay the balance. 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?

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.

Other Considerations
RAMs involve important decisions and can be complicated. It is important that homeowners consider their plans carefully and get appropriate advice from an attorney, accountant, or other reliable, professional source before deciding. It is recommended that anyone contemplating using a RAM to generate income contact the Connecticut Housing Finance Authority (http://www.chfa.org/Homeownership/for%20Homeowners/default.aspx) to consult with an information and referral specialist.

Additional Resources

To Find Providers in Connecticut’s Community Resources Database:
Search by service name: Reverse Mortgage Programs

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SOURCES:  Connecticut Housing Finance Authority; “Reverse Mortgage Overview” posted on the KnowYourOptions.com (Fannie Mae) website
PREPARED BY: 211/nl 
CONTENT LAST REVIEWED: November2021