What is a reverse mortgage and who typically uses it?
Why A loan where the lender pays the borrower monthly, typically used by homeowners 62 or older Is Correct
Answer A: A loan where the lender pays the borrower monthly, typically used by homeowners 62 or older
Exam Tip: Finance
Finance questions often involve calculations. Master the T-bar method, understand the difference between conventional and government-backed loans, and know key ratios like LTV and DTI.
People Also Study
Related California Questions
- A borrower's monthly gross income is $8,500. The lender uses a 43% maximum DTI. The borrower has $850 in existing monthly debt payments. What is the maximum allowable monthly mortgage payment?Real Estate Math
- A reverse mortgage allows a homeowner to:Finance
- Which type of loan allows the borrower to draw funds as needed during a set period, using the home as collateral?Finance
- A borrower makes 360 monthly payments of $1,200. The original loan was $180,000. How much total interest was paid?Real Estate Math
- A buyer's monthly gross income is $6,000. Their monthly debts include a $400 car payment and a $100 student loan payment. The proposed PITI is $1,500. What is the buyer's total debt-to-income (back-end) ratio?Real Estate Math
- A loan that requires only interest payments during the loan term with the entire principal due at maturity is called a:Finance
- Under conventional lending standards, what is the maximum LTV ratio for a first mortgage on a single-family home that does NOT require private mortgage insurance (PMI)?Finance
Key Terms to Know
The gradual repayment of a loan through scheduled periodic payments that cover both principal and interest.
Debt-to-Income Ratio (DTI)A lender's measure of a borrower's monthly debt obligations relative to their gross monthly income, used to evaluate loan eligibility.
Discount PointsPrepaid interest paid to a lender at closing to reduce the mortgage interest rate, with each point equal to 1% of the loan amount.
Pre-ApprovalA lender's conditional commitment to loan a specific amount to a borrower, based on verified income, credit, and assets.
Math Concepts
Study This Topic
Practice More California Real Estate Questions
1,500+ questions covering all exam topics. Start free — no signup required.
Take the Free California Quiz →