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HECM Practice Questions and Correct
Answers/ Latest Update / Already Graded
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.
Ans: 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.
Ans: d
TALC rates generally are greatest when borrowers live:
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a. less than their life expectancies.
b. to their full life expectances.
c. longer than their life expectancies
Ans: a
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.
Ans: 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.
Ans: c
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T/F Most lenders require that borrowers take a lump sum payment if
they choose an adjustable rate and only allow a creditline with a fixed
interest rate HECM.
Ans: False
T/F Given the same principal limit, a term payment plan will provide a
larger monthly payment than a tenure payment plan.
Ans: True
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.
Ans: a
A borrower who needs a monthly payment for a short period of time
and then wants to have the opportunity to borrow more in the future
may want to choose which type of payment plan?
a. Initial Lump Sum
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b. Modified Tenure
c. Modified Term
d. Tenure
Ans: c
A "forward" mortgage is a type of loan in which:
a. extra principal payments are made, so that the payoff date is moved
forward.
b. payments are made on a regular schedule, gradually reducing the
debt and building equity.
Ans: b
Which of the following is true of proprietary reverse mortgages?
a. Borrowers do not have to pay for FHA mortgage insurance.
b. Proprietary reverse mortgages are typically designed for high value
homes (those beyond FHA mortgage limits).
c. Proprietary reverse mortgages typically have lower loan-to-value
ratio than HECMs.
d. All of the above
Ans: d
All rights reserved © 2025/ 2026 |
HECM Practice Questions and Correct
Answers/ Latest Update / Already Graded
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.
Ans: 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.
Ans: d
TALC rates generally are greatest when borrowers live:
All rights reserved © 2025/ 2026 |
, Page |2
a. less than their life expectancies.
b. to their full life expectances.
c. longer than their life expectancies
Ans: a
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.
Ans: 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.
Ans: c
All rights reserved © 2025/ 2026 |
, Page |3
T/F Most lenders require that borrowers take a lump sum payment if
they choose an adjustable rate and only allow a creditline with a fixed
interest rate HECM.
Ans: False
T/F Given the same principal limit, a term payment plan will provide a
larger monthly payment than a tenure payment plan.
Ans: True
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.
Ans: a
A borrower who needs a monthly payment for a short period of time
and then wants to have the opportunity to borrow more in the future
may want to choose which type of payment plan?
a. Initial Lump Sum
All rights reserved © 2025/ 2026 |
, Page |4
b. Modified Tenure
c. Modified Term
d. Tenure
Ans: c
A "forward" mortgage is a type of loan in which:
a. extra principal payments are made, so that the payoff date is moved
forward.
b. payments are made on a regular schedule, gradually reducing the
debt and building equity.
Ans: b
Which of the following is true of proprietary reverse mortgages?
a. Borrowers do not have to pay for FHA mortgage insurance.
b. Proprietary reverse mortgages are typically designed for high value
homes (those beyond FHA mortgage limits).
c. Proprietary reverse mortgages typically have lower loan-to-value
ratio than HECMs.
d. All of the above
Ans: d
All rights reserved © 2025/ 2026 |
