HECM REVERSE MORTGAGE; A LOAN AGAINST
HOME EQUITY PROVIDING CASH AVANCES TO A
BORROWER AND REQUIRING NO REPAYMENT
UNTIL A FUTURE TIME TEST QUESTIONS AND
ANSWERS
HOME EQUITY - ANSWER HOME VALUE MINUS LIENS ON THE
HOME
PURPOSE OF A REVERSE MORTGAGE - ANSWER GENERATE CASH
FORWARD MORTGAGE PURPOSE - ANSWER THE ORDINARY
MORTGAGE MOST PEOPLE USE TO PURCHASE HOME
FORWARD MORTGAGE - ANSWER BORROWERS EQUITY
INCREASES OVER TIME THE LOAN BALANCES DECREASES AS
PAYMENTS ARE MADE TO LENDER
REVERSE MORTGAGE - ANSWER RISING DEBT FALLING EQUITY
TRANSACTIONS
HECM BASIC FEATURES - ANSWER THE BORROWER RETAINS
TITLE TO THE HOME.
THE BORROWER IS STILL RESPONSIBLE FOR TAXES INSURANCE
AND UPKEEP.
THE BORROWER ESTATE MUST PAY OFF THE LOAN UPON THE
BORROWERS DEATH.
THE AMOUNT OF THE LOAN ADVANCES GENERALLY DEPENDS ON
THE VALUE OF THE HOME, AGE OF THE BORROWER AND THE COST
OF THE LOAN (LOAN FEES AND INTEREST RATE)
The loan balance (amount owed) rises over time
Financed Fees - ANSWER Fees paid using part of the loan fees
, Reverse Mortgage - ANSWER is a loan against home equity providing cash
advances to a borrower and requiring no repayment until a future time
Reverse mortgage insurance - ANSWER permit borrowers to remain in their
homes for as long as they choose to protect borrowers with non-recourse loan
limit and to protect lenders from the risk that some loan balances may exceed
home values
single-purpose reverse mortgages - ANSWER offered by some state and local
government agencies. Each loan can only be used for a single purpose example,
home repairs, property taxes. These plans generally have maximum income
eligibility requirements but the cost is usually very low or moderate
proprietary reverse mortgages - ANSWER are developed owned and insured
by private companies. More costly than the federally-insured Hecm. They have
targeted owners of homes whose high values made the Hecm loan more
limiting. called Jumbo reverse mortgages.
eligible homeowners - ANSWER 62and over principal residence at least 6
months of year, at least one owner must be residing in the home at the time of
closing
own the home
existing mortgage must be paid off before or at closing or must be subordinated
to the Hecm
Hecm must be first mortgage, but can be used to pay off existing liens on the
property
eligible properties - ANSWER single family, 1-4 unit owner occupied
dwelling
manufactured homes are eligible if the meet FHA approved
borrower owns land beneath the home
home is permanently affixed foundation
home was built after 6-15-1976 and( has a sticker to so indicate)
Mobile homes are NOT ELIGIBLE
COOPERATIVES ARE NOT ELIGIBLE
PAYMENT OPTIONS - ANSWER 6 payment options: tenure, term, line of
credit, modified term, modified tenure and lump sum
HOME EQUITY PROVIDING CASH AVANCES TO A
BORROWER AND REQUIRING NO REPAYMENT
UNTIL A FUTURE TIME TEST QUESTIONS AND
ANSWERS
HOME EQUITY - ANSWER HOME VALUE MINUS LIENS ON THE
HOME
PURPOSE OF A REVERSE MORTGAGE - ANSWER GENERATE CASH
FORWARD MORTGAGE PURPOSE - ANSWER THE ORDINARY
MORTGAGE MOST PEOPLE USE TO PURCHASE HOME
FORWARD MORTGAGE - ANSWER BORROWERS EQUITY
INCREASES OVER TIME THE LOAN BALANCES DECREASES AS
PAYMENTS ARE MADE TO LENDER
REVERSE MORTGAGE - ANSWER RISING DEBT FALLING EQUITY
TRANSACTIONS
HECM BASIC FEATURES - ANSWER THE BORROWER RETAINS
TITLE TO THE HOME.
THE BORROWER IS STILL RESPONSIBLE FOR TAXES INSURANCE
AND UPKEEP.
THE BORROWER ESTATE MUST PAY OFF THE LOAN UPON THE
BORROWERS DEATH.
THE AMOUNT OF THE LOAN ADVANCES GENERALLY DEPENDS ON
THE VALUE OF THE HOME, AGE OF THE BORROWER AND THE COST
OF THE LOAN (LOAN FEES AND INTEREST RATE)
The loan balance (amount owed) rises over time
Financed Fees - ANSWER Fees paid using part of the loan fees
, Reverse Mortgage - ANSWER is a loan against home equity providing cash
advances to a borrower and requiring no repayment until a future time
Reverse mortgage insurance - ANSWER permit borrowers to remain in their
homes for as long as they choose to protect borrowers with non-recourse loan
limit and to protect lenders from the risk that some loan balances may exceed
home values
single-purpose reverse mortgages - ANSWER offered by some state and local
government agencies. Each loan can only be used for a single purpose example,
home repairs, property taxes. These plans generally have maximum income
eligibility requirements but the cost is usually very low or moderate
proprietary reverse mortgages - ANSWER are developed owned and insured
by private companies. More costly than the federally-insured Hecm. They have
targeted owners of homes whose high values made the Hecm loan more
limiting. called Jumbo reverse mortgages.
eligible homeowners - ANSWER 62and over principal residence at least 6
months of year, at least one owner must be residing in the home at the time of
closing
own the home
existing mortgage must be paid off before or at closing or must be subordinated
to the Hecm
Hecm must be first mortgage, but can be used to pay off existing liens on the
property
eligible properties - ANSWER single family, 1-4 unit owner occupied
dwelling
manufactured homes are eligible if the meet FHA approved
borrower owns land beneath the home
home is permanently affixed foundation
home was built after 6-15-1976 and( has a sticker to so indicate)
Mobile homes are NOT ELIGIBLE
COOPERATIVES ARE NOT ELIGIBLE
PAYMENT OPTIONS - ANSWER 6 payment options: tenure, term, line of
credit, modified term, modified tenure and lump sum
