HECM Terminology Complete Questions And Answers
With Latest Quiz
.203-b Limit (no longer used as of 11/2009) - ANSWER-the maximum amount of
home value that could be used to calculate the principal limit; varied by county,
and also equals the limit on HUD's loan insurance under section 203 (b) of the
National Housing Act
.A 62 year old borrower would get _____ money from a HECM than a 82 year
old borrower.
a. more
b. less
c. the same amount - ANSWER-b
.A HECM does not have to be repaid - ANSWER-until the last surviving borrower
dies, sells the home, or permanently moves from the home. Borrowers may
partially or fully repay the loan balance at any time without any penalty.
.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 - 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 -
ANSWER-c
.A reverse mortgage must be repaid
a) by the tenth of every month
b) when the borrower dies, sells, or permanently moves away
c) when the loan balance equals the value of the home
d) when the borrower uses up all available loan funds - ANSWER-b
.Annually adjustable interest rates - ANSWER-cannot vary by more than 2
percentage points
per year, or 5 points over the life of the loan. Lenders may also offer a
monthlyadjustable
rate with only a lifetime cap established by the lender.
.At closing, the borrowers sign documents including: - ANSWER-First Mortgage
(or Deed of Trust) and First Note, Second Mortgage (or Deed of Trust) and
Second Note, Loan Agreement, Truth in Lending Disclosure, and HUD-1
Settlement Statement
.Credit Report - ANSWER-generally an advance payment of about $25 for a
simplified credit
report, but may be refunded to borrower and added to the loan balance at
With Latest Quiz
.203-b Limit (no longer used as of 11/2009) - ANSWER-the maximum amount of
home value that could be used to calculate the principal limit; varied by county,
and also equals the limit on HUD's loan insurance under section 203 (b) of the
National Housing Act
.A 62 year old borrower would get _____ money from a HECM than a 82 year
old borrower.
a. more
b. less
c. the same amount - ANSWER-b
.A HECM does not have to be repaid - ANSWER-until the last surviving borrower
dies, sells the home, or permanently moves from the home. Borrowers may
partially or fully repay the loan balance at any time without any penalty.
.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 - 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 -
ANSWER-c
.A reverse mortgage must be repaid
a) by the tenth of every month
b) when the borrower dies, sells, or permanently moves away
c) when the loan balance equals the value of the home
d) when the borrower uses up all available loan funds - ANSWER-b
.Annually adjustable interest rates - ANSWER-cannot vary by more than 2
percentage points
per year, or 5 points over the life of the loan. Lenders may also offer a
monthlyadjustable
rate with only a lifetime cap established by the lender.
.At closing, the borrowers sign documents including: - ANSWER-First Mortgage
(or Deed of Trust) and First Note, Second Mortgage (or Deed of Trust) and
Second Note, Loan Agreement, Truth in Lending Disclosure, and HUD-1
Settlement Statement
.Credit Report - ANSWER-generally an advance payment of about $25 for a
simplified credit
report, but may be refunded to borrower and added to the loan balance at
