OLR Report 2012-R-0277 updates OLR Report 2004-R-0007 on reverse annuity mortgages and where to get one.
A reverse annuity mortgage (RAM) is a loan aimed at senior citizens who have paid off their houses but cannot afford to stay there or need extra money for home repair, long-term care, medical treatment, or other purposes. It allows a homeowner to convert into cash some of the equity he or she has built up in the home. The loan proceeds are tax-free and there are no minimum income requirements for most private RAMs. The loans are usually paid to the borrower monthly, instead of in one lump sum, and repaid when the borrower sells the home, moves out, or dies.
The Connecticut Housing Finance Authority (CHFA) offers RAMs to homeowners of single family houses or condos who are at least 70 years old if (1) at least one borrower needs long-term health care or supportive services and (2) household income does not exceed $81,000 per year. The federal Department of Housing and Urban Development (HUD) and several private lenders also offer RAMs to qualifying homeowners.
A number of private lenders also offer reverse mortgages in Connecticut.
A fact sheet on RAMs from the Federal Trade Commission (FTC) is available at: http://www.ftc.gov/bcp/edu/pubs/consumer/homes/rea13.pdf.
