Finance
What is a 'reverse mortgage' and how does it benefit qualifying Pennsylvania homeowners?
AA mortgage where the lender pays the borrower monthly payments, available to homeowners 62 or older, with repayment deferred until the borrower moves, sells, or dies✓ Correct
BA refinance program that reduces the interest rate while increasing the loan balance
CA PHFA program allowing homeowners to reverse the direction of appreciation
DA second mortgage taken when the first mortgage is paid down to 50% LTV
Explanation
A reverse mortgage (Home Equity Conversion Mortgage/HECM) allows homeowners 62 or older to convert home equity into cash without monthly payments. Repayment is deferred until the borrower permanently moves out, sells the home, or passes away.
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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.
AmortizationThe 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.
Math Concepts
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