HECM Practice Midterm Exam 2026 || Most
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To qualify for a HECM loan
a) at least one owner must be aged 65 or over
b) a mobile home or cooperative must be FHA-approved
c) a home must be debt free prior to loan application
d) none of the above
ANSWERS: d
When a HECM loan is repaid, the borrower must pay back
a) only the funds they received
b) the funds received plus simple interest
c) the funds received plus loan fees such as mortgage insurance and
servicing fees
d) the funds received plus loan fees and interest compounded on the
entire balance
ANSWERS: d
,The payment options in the HECM program include
a) a fixed monthly advance for as long as a borrower lives in the home
b) a fixed monthly advance for a period chosen by the borrower
c) a creditline that lets the borrower select the timing and amount of the
advances
d) a combination of monthly advances and creditline
e) all of the above
ANSWERS: e
The HECM loan may be used to pay for
a) repairs needed to meet FHA minimum property standards
b) standard closing costs
c) 2% mortgage insurance premium
d) the origination fee
e) all of the above
ANSWERS: e
When the adjustable interest rate on a reverse mortgage goes up
a) the monthly payments to the borrower go down
b) the rate at which the creditline grows goes up
c) the loan balance grows faster
d) b and c above
ANSWERS: d
,HECM term advances:
a. are generally larger than tenure advances.
b. are monthly payments for a fixed number of months chosen by the
lender.
c. do not allow unscheduled lump sum draws.
ANSWERS: a
The HECM Saver was introduced as an option to lower the upfront cost
of a HECM by reducing the upfront mortgage insurance premium to:
a. 0.
b. 0.01% of the Maximum Claim Amount.
c. 1% of the Maximum Claim Amount.
d. 1.25% of the Maximum Claim Amount.
ANSWERS: b
If repairs are required but can be completed after closing, the lender
will create a repair set-aside in the amount of:
a. 15% of the maximum claim amount.
b. 100% of the actual cost of repairs.
c. 100% of the estimated cost of repairs.
d. 150% of the estimated cost of repairs.
ANSWERS: d
, The net principal limit at closing is:
a. a percentage of the maximum claim amount before any funds are set-
aside or any fees are paid.
b. the credit remaining after all set-asides and fees have been deducted.
c. the lesser of the home's appraised value or the lending limit.
d. the most HUD will pay on an insurance claim.
ANSWERS: b
Mr. Martin is 83 and his wife is 65. If Mrs. Martin is removed from the title
to the home, the HECM principal limit would be:
a. smaller.
b. the same.
c. larger.
ANSWERS: c
T/F Given the same principal limit, a term payment plan will provide a
larger monthly payment than a tenure payment plan.
ANSWERS: True
Recent Exam With Actual Complete Real
Questions And Correct Answers (Verified
Answers) Already Graded A+ | Guaranteed
Success!!| Newest Exam | Just Released!!
To qualify for a HECM loan
a) at least one owner must be aged 65 or over
b) a mobile home or cooperative must be FHA-approved
c) a home must be debt free prior to loan application
d) none of the above
ANSWERS: d
When a HECM loan is repaid, the borrower must pay back
a) only the funds they received
b) the funds received plus simple interest
c) the funds received plus loan fees such as mortgage insurance and
servicing fees
d) the funds received plus loan fees and interest compounded on the
entire balance
ANSWERS: d
,The payment options in the HECM program include
a) a fixed monthly advance for as long as a borrower lives in the home
b) a fixed monthly advance for a period chosen by the borrower
c) a creditline that lets the borrower select the timing and amount of the
advances
d) a combination of monthly advances and creditline
e) all of the above
ANSWERS: e
The HECM loan may be used to pay for
a) repairs needed to meet FHA minimum property standards
b) standard closing costs
c) 2% mortgage insurance premium
d) the origination fee
e) all of the above
ANSWERS: e
When the adjustable interest rate on a reverse mortgage goes up
a) the monthly payments to the borrower go down
b) the rate at which the creditline grows goes up
c) the loan balance grows faster
d) b and c above
ANSWERS: d
,HECM term advances:
a. are generally larger than tenure advances.
b. are monthly payments for a fixed number of months chosen by the
lender.
c. do not allow unscheduled lump sum draws.
ANSWERS: a
The HECM Saver was introduced as an option to lower the upfront cost
of a HECM by reducing the upfront mortgage insurance premium to:
a. 0.
b. 0.01% of the Maximum Claim Amount.
c. 1% of the Maximum Claim Amount.
d. 1.25% of the Maximum Claim Amount.
ANSWERS: b
If repairs are required but can be completed after closing, the lender
will create a repair set-aside in the amount of:
a. 15% of the maximum claim amount.
b. 100% of the actual cost of repairs.
c. 100% of the estimated cost of repairs.
d. 150% of the estimated cost of repairs.
ANSWERS: d
, The net principal limit at closing is:
a. a percentage of the maximum claim amount before any funds are set-
aside or any fees are paid.
b. the credit remaining after all set-asides and fees have been deducted.
c. the lesser of the home's appraised value or the lending limit.
d. the most HUD will pay on an insurance claim.
ANSWERS: b
Mr. Martin is 83 and his wife is 65. If Mrs. Martin is removed from the title
to the home, the HECM principal limit would be:
a. smaller.
b. the same.
c. larger.
ANSWERS: c
T/F Given the same principal limit, a term payment plan will provide a
larger monthly payment than a tenure payment plan.
ANSWERS: True
