Reverse Annuity Mortgage Program
Program Overview
The Reverse Annuity Mortgage
Program (RAM) offers lump sum loans
and or monthly installment loans to
elderly homeowners with long-term
care needs over a term of five or
ten years. The amount of the RAM loan is based on
the equity in the borrower’s home
and is repaid to CHFA in one payment
when the property is sold,
transferred or no longer occupied by
the borrower.
By offering creative loan options like RAM to homeowners,
CHFA, with its partner in this program, the
Connecticut Department of Social Services (DSS), is
helping Connecticut’s older residents maintain their homes
during periods of chronic illness or disability.
Prospective borrowers of a RAM loan should contact
DSS, Aging Services Division, for an initial eligibility
assessment. RAM loans are originated, closed and serviced
directly through CHFA’s Single-Family Underwriting
Department.
Follow the links below for more information regarding the
Reverse Annuity Mortgage Program.
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Reverse Annuity Mortgage Program Interest Rates
Currently, the Reverse Annuity
Mortgage Program is providing mortgages at the
following rate:
- Interest rate: 7.000%** (7.1% APR fixed rate)
- Fees: Approximately $1500 - including a $600 Loan origination fee, Appraisal fee, Long Term Care assessment fee, title search, title insurance, legal fee, and recording costs
- Term: open-ended mortgage
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** Please note, this rate is subject
to change and additional fees may apply.
Who can
apply for a Reverse Annuity Mortgage
Program
loan?
Homeowners of single family
houses or condos who are at least 70
years old and have a long-term care
need may apply for a RAM loan. A
borrower’s spouse must also be at
least 70 years old and have a joint
ownership interest in the property
with rights of survivorship, unless
he or she is permanently
institutionalized.
- What types of Long Term Care needs qualify for a RAM
loan?
Long Term Care (LTC) describes a range of medical and
supportive services provided to individuals who have lost
some or all of their capacity for independent function, as a
result of a chronic illness or condition. Usually, a
Long
Term Care need requires at least six months of sustained
services.
Homeowners who are receiving out-of-home care can still
qualify for a RAM loan so long as their spouse, who is a
joint-owner of the property, continues to remain in the
home. The following specific types of LTC costs will be
considered when applying for a RAM loan.
- Out-of-home care: including but not limited to
hospitals, convalescent nursing homes, homes for the
aged, or rest homes with nursing supervision; adult day
care; counseling and physical therapy;
- In-home care: including but not limited to nursing,
personal care attendants, homemaker or chore services,
nutrition services and transportation;
- Durable medical equipment;
- Medically-indicated home alterations;
- LTC insurance premiums;
- Uninsured recurring and catastrophic medical
expenses and prescription drugs.
The RAM Program requires that eligible property meet
specific guidelines.
- The property must be either a single family house or
a unit in a condominium complex or Planned Unit
Development (PUD) complex that has been approved by CHFA
and is on the
CHFA Condominium list. (This list
includes eligible PUDs.)
- The home may not be a recreational, vacation,
investment or rental property and no part of the home
may be designed for a commercial purpose.
- The home must be free of any mortgage or lien at the
time of closing a RAM loan. (A RAM loan can provide an
additional $5,000 to pay off liens.)
- In contrast to many of the CHFA home loan programs
that apply sales price limits to eligible properties, a
home eligible for a RAM loan is not subject to a maximum
appraised value. However, the maximum RAM loan
available is $417,000.
How
much can you borrow under the
Reverse Annuity Mortgage Program?
Under the RAM program, a borrower can receive a loan of
up to 70% of the appraised value of his or her home, as long
as the loan amount does not exceed $417,000, the maximum
loan available under this program. CHFA will arrange for
the home appraisal, the cost of which will be covered in the
loan amount.
A borrower can opt for a lump sum payment of up to $5,000
at the time of the closing of a RAM loan. The lump sum can
be used to pay off small liens, back taxes, outstanding
bills, medical expenses or minor home repairs and
improvements. If a borrower requires medical or supportive
services, a lump sum payment of as much as $25,000 is
permitted.
A borrower will receive tax-free monthly payments of the
balance of the loan over a five-year or ten-year term. The
monthly payments will increase by 3% each year of the loan,
to keep pace with cost of living increases. A lump sum
payment at the loan closing will reduce the amount of the
monthly payment by approximately $19 for each $1,000 of the
lump sum payment, based on a five-year term. (See,
table of
RAM payments.)
The following considerations
apply to Reverse
Annuity Mortgage Program loans.
- You continue to own your
home during the term of the RAM
loan.
A RAM borrower will continue
to own his or her home and will
benefit from any appreciation in
value of the home that may occur
during the loan term.
- You may sell your home
before the term of the loan
ends.
At any time within the
five-year or ten-year payment
period, RAM borrowers may sell
their homes. The sale of the
home, however, will signal the
end to the monthly loan payments
and the time when full repayment
of the outstanding balance of
the RAM loan comes due.
- There is no pre-payment
penalty.
A RAM loan is pre-payable at
any time for any reason.
- Repayment is not required at
the end of the loan term.
At the end of the five-year
or ten-year payment period, CHFA
will not require RAM borrowers
to pay off the loan or sell
their home. Though the monthly
payments stop, CHFA will
continue to
carry the loan balance which
accrues interest at the rate of 7% each year.
Generally, full repayment of
the loan will come due when the
home is eventually sold,
transferred or when the borrower
no longer occupies the home. If
the proceeds of the home sale do
not cover the full value of the
RAM loan, CHFA has the right to
seek repayment by looking at
other assets of the borrower.
Heirs will not have any personal
liability for this debt.
- You can choose to have your
own home appraisal.
The lender will arrange for
an appraisal of a RAM borrower’s
home. However, at their own
out-of-pocket expense, RAM
borrowers can choose to have an
independent appraisal of their
home. The results of this
appraisal will determine maximum
loan eligibility.
- Real estate taxes and
insurance must be current at the
closing of a RAM loan and during
the loan term.
Although CHFA will not
escrow for real estate taxes and
insurance premiums, CHFA does
require that a borrower’s real
estate and property insurance
payments are current at the loan
closing and during the life of
the loan.
A RAM loan can provide a
lump sum of $5,000 to pay off
any outstanding tax liens and
some utility arrearages at the
time of the loan closing. This
sum is then included in the
value of the total loan and will
reduce the monthly installment
amount.
- A RAM loan could affect some
of your rights to public
benefits.
A RAM loan would not
affect a borrower’s rights under
Social Security, Medicare,
Energy Assistance, Property Tax
Relief, or the Pharmaceutical
Assistance Program (CONNPACE).
However, it might affect a
borrower’s rights under
Medicaid, Food Stamps,
Supplemental Security Income
(SSI) or the State Supplement to
SSI.
How do
you apply for a Reverse Annuity
Mortgage?
RAM loans are originated, closed and
serviced directly by CHFA. However, prospective borrowers
should first contact the Aging Services Division of the
Connecticut Department of Social Services to obtain a
preliminary eligibility assessment and a referral. They may
call 860-424-5284 or 1-800-443-9946, toll-free within
Connecticut.
If a prospective borrower is referred to CHFA for a RAM
loan, a CHFA representative will schedule a meeting in order
to review the RAM loan application in greater detail.
- Are any application fees associated with a RAM
loan?
No, there are no application fees for a RAM loan;
however, several upfront one-time costs are added to the
value of the RAM loan. These include a $600 fee for the
cost of the loan origination and a $900 fee to cover the
costs of the home appraisal, the LTC assessment, the title
search, title insurance and other costs. A RAM borrower must
also pay for the cost of retaining an attorney to represent
his or her interests at the loan closing.
Questions? Contact CHFA
Please direct questions and comments
related to the Reverse Annuity
Mortgage Program
to the “Single Family Underwriting”
department of the Connecticut Housing
and Finance Authority.
Mailing Address:
CHFA
Attn: Single Family Underwriting
999 West Street
Rocky Hill, CT 06067-4005
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Documents related to the Reverse
Annuity Mortgage Program
The following documents are related
to the Reverse Annuity Mortgage
Program.
To open and view the document, click
on the document title. Please
note that some documents may need
client software to view the
document.
| Related Documents |
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| File | Size | Type | Ram Brochure
This brochure provides an overview of the Reverse Annuity Mortgage (RAM) Program. | 1512K | pdf |
| Table of RAM Payments
This table calculates the monthly payments available under five-year and a ten-year Reverse Annuity Mortgage loans, with and without initial lump-sum payments. | 118K | pdf | | File | Size | Type |
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