Finance
In Virginia, a reverse mortgage allows qualified homeowners aged 62 or older to:
APurchase a home with no down payment
BConvert home equity into loan proceeds without making monthly payments, with repayment deferred until they leave the home✓ Correct
CRefinance their home at a lower rate
DTransfer their home to a family member while retaining a life estate
Explanation
A reverse mortgage (HECM) allows seniors 62+ to convert home equity into cash or a credit line without monthly payments. The loan is repaid when the borrower moves out, sells the property, or passes away.
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Key Terms to Know
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.
Life EstateA freehold interest in real property that lasts only for the duration of a specified person's life.
AmortizationThe gradual repayment of a loan through scheduled periodic payments that cover both principal and interest.
Math Concepts
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