Finance
Which of the following best describes a 'reverse mortgage'?
AA mortgage where the lender pays the property taxes and deducts them from the loan balance
BA loan available to homeowners aged 62+ that allows them to convert home equity into cash, with repayment deferred until the home is sold or the borrower leaves✓ Correct
CA refinance loan with a lower interest rate than the original mortgage
DA mortgage with a balloon payment at year 5
Explanation
A reverse mortgage (Home Equity Conversion Mortgage or HECM) is available to homeowners aged 62 and older. The lender makes payments to the borrower based on home equity. The loan becomes due when the borrower sells the home, moves out, or dies. It is insured by FHA.
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