What type of loan is a reverse annuity mortgage (RAM)?

A reverse annuity mortgage (RAM) is designed to provide cash advances to homeowners based on the equity they have built up in their home. This type of loan allows senior homeowners, typically aged 62 and above, to convert part of their home equity into cash, which they can use for various expenses such as healthcare, home repairs, or supplementing retirement income, without the obligation to make monthly mortgage payments.

The nature of a RAM is particularly beneficial for those who wish to remain in their home while tapping into its value, as it does not require repayment until the homeowner sells the home, moves out, or passes away. This characteristic makes option B the best choice in defining a RAM, highlighting its function as a tool for leveraging home equity rather than for purchasing a new property or serving temporary financial needs.