HECM TERMINOLOGY PRACTICE EXAM
Questions With 100% Correct Answers
2025 TOP RATED A+
Home value - Correct Answer-The first factor to be considered
is the value of the home,
as determined by a HUD-approved appraiser. This is the
market value of
the property at the time the loan is closed.
The rate of interest to be charged on the loan matters
because: - Correct Answer-The higher the rate of interest, the
larger the accrued interest charges will be over time. If more
of the
borrower's home value will be consumed by interest charges,
then
less will be available for the borrower to use for their own
purposes.
,Initial Closing Costs - Correct Answer-Since most borrowers
finance the initial
costs into the loan, part of the available loan amount will be
consumed by those costs. The higher the costs, the less money
is
left for payments to the borrower.
Set-asides are - Correct Answer-used to reserve loan proceeds
for a
particular future use. These reserved amounts, though not
added
onto the loan balance until actually drawn, reduce the
amount of
funds available for other purposes. The most common types
of setasides
are for servicing fees (currently required on all HECMs),
required repairs, and taxes/insurance.
Service fee set-aside - Correct Answer-The monthly servicing
fee may not
exceed $30 for HECMs with annually adjusting interest, and
may not exceed $35 for HECMs with monthly adjusting
, interest.
Principal limit is calculated - Correct Answer-by multiplying
the Maximum Claim
Amount by a "principal limit factor".
A reverse mortgage is
a) a loan against equity in a home
b) a loan providing cash advances to a borrower
c) a loan requiring no repayment until a future time
d) a, b, and c - Correct Answer-d
A reverse mortgage is different from a home equity loan
because
a) you need a good income to qualify for a reverse mortgage
b) you need little home equity to get a reverse mortgage
c) you do not have to make monthly repayments on a reverse
mortgage - Correct Answer-c
A reverse mortgage must be repaid
a) by the tenth of every month
Questions With 100% Correct Answers
2025 TOP RATED A+
Home value - Correct Answer-The first factor to be considered
is the value of the home,
as determined by a HUD-approved appraiser. This is the
market value of
the property at the time the loan is closed.
The rate of interest to be charged on the loan matters
because: - Correct Answer-The higher the rate of interest, the
larger the accrued interest charges will be over time. If more
of the
borrower's home value will be consumed by interest charges,
then
less will be available for the borrower to use for their own
purposes.
,Initial Closing Costs - Correct Answer-Since most borrowers
finance the initial
costs into the loan, part of the available loan amount will be
consumed by those costs. The higher the costs, the less money
is
left for payments to the borrower.
Set-asides are - Correct Answer-used to reserve loan proceeds
for a
particular future use. These reserved amounts, though not
added
onto the loan balance until actually drawn, reduce the
amount of
funds available for other purposes. The most common types
of setasides
are for servicing fees (currently required on all HECMs),
required repairs, and taxes/insurance.
Service fee set-aside - Correct Answer-The monthly servicing
fee may not
exceed $30 for HECMs with annually adjusting interest, and
may not exceed $35 for HECMs with monthly adjusting
, interest.
Principal limit is calculated - Correct Answer-by multiplying
the Maximum Claim
Amount by a "principal limit factor".
A reverse mortgage is
a) a loan against equity in a home
b) a loan providing cash advances to a borrower
c) a loan requiring no repayment until a future time
d) a, b, and c - Correct Answer-d
A reverse mortgage is different from a home equity loan
because
a) you need a good income to qualify for a reverse mortgage
b) you need little home equity to get a reverse mortgage
c) you do not have to make monthly repayments on a reverse
mortgage - Correct Answer-c
A reverse mortgage must be repaid
a) by the tenth of every month
