Finance
A Wisconsin reverse mortgage (HECM) requires that the borrower:
AMake monthly principal and interest payments
BContinue to pay property taxes, insurance, and maintain the property — failure to do so may trigger default✓ Correct
CHave no existing mortgage on the property
DBe at least 55 years old
Explanation
While a HECM does not require monthly principal and interest payments, borrowers must continue to pay property taxes, homeowner's insurance, and maintain the property; failure to do so may cause the loan to become due.
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Key Terms to Know
Amortization
The gradual repayment of a loan through scheduled periodic payments that cover both principal and interest.
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.
Adjustable-Rate Mortgage (ARM)A mortgage with an interest rate that changes periodically based on a financial index, usually after an initial fixed-rate period.
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.
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