Finance
The Wisconsin Homeowners Counseling Act requires HUD-approved counseling for borrowers receiving certain:
ACommercial mortgages
BReverse mortgages (HECMs) before loan origination✓ Correct
CFHA loans only
DAdjustable-rate mortgages
Explanation
Reverse mortgage (HECM) borrowers are required to complete HUD-approved counseling before the loan is originated to ensure they understand the product's costs and implications.
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Key Terms to Know
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.
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.
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.
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