Finance
A Maine reverse mortgage allows a senior homeowner (62+) to:
APurchase a new home with no down payment
BConvert home equity into cash without making monthly mortgage payments✓ Correct
CSell their home back to the lender at market value
DAvoid property taxes for the life of the loan
Explanation
A reverse mortgage (Home Equity Conversion Mortgage - HECM) allows homeowners 62+ to convert home equity into cash while remaining in the home, without making monthly mortgage payments. The loan is repaid when the borrower sells, moves, or dies.
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Key Terms to Know
Loan-to-Value Ratio (LTV)
The ratio of a mortgage loan amount to the appraised value or purchase price of a property, expressed as a percentage.
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.
Private Mortgage Insurance (PMI)Insurance required by lenders on conventional loans with less than 20% down payment, protecting the lender — not the borrower — against default.
AmortizationThe gradual repayment of a loan through scheduled periodic payments that cover both principal and interest.
Math Concepts
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