### What is a reverse mortgage primarily designed for? - [x] Homeowners over a certain age with significant home equity - [ ] First-time homebuyers looking for low down payment options - [ ] Investors looking to purchase rental properties - [ ] Individuals seeking to refinance their home for better interest rates > **Explanation:** A reverse mortgage is intended for older homeowners who have significant equity in their homes. It allows them to convert part of the equity into cash without having to sell the home or make monthly mortgage payments. ### When is a reverse mortgage loan typically repaid? - [ ] Each month - [ ] At the end of the calendar year - [ ] Upon receiving the loan - [x] When the homeowner moves, sells the home, or passes away > **Explanation:** A reverse mortgage is generally repaid when the homeowner either sells the house, moves out of the house permanently, or passes away. The loan is not repaid in monthly installments like a traditional mortgage. ### Can the funds from a reverse mortgage be used for any purpose? - [x] Yes, they can be used for anything the borrower desires - [ ] No, they must be used for home improvements - [ ] No, they must be used for medical expenses - [ ] No, they must be used to pay off other debts > **Explanation:** The funds obtained from a reverse mortgage can be used for any purpose the borrower wishes, whether it's to supplement retirement income, cover healthcare expenses, or take vacations. There are no restrictions on how the money can be spent. ### What happens to a reverse mortgage if the homeowner moves to a retirement community? - [ ] The homeowner must immediately pay back the loan out-of-pocket - [x] Plans are put in place to repay the loan through the equity in the home - [ ] The homeowner continues to make monthly payments on the loan - [ ] The loan is forgiven > **Explanation:** If the homeowner moves to a retirement community, the reverse mortgage lender typically puts plans in place to repay the loan through the equity in the home. This may involve selling the home or other financial arrangements. ### Who is eligible for a reverse mortgage? - [ ] Anyone who owns a home - [ ] Only individuals with excellent credit scores - [x] Homeowners over a certain age with substantial home equity - [ ] Only individuals with significant savings > **Explanation:** Reverse mortgages are primarily available to homeowners who are over a certain age (usually 62 or older) and who have significant equity in their homes. This allows them to convert this equity into cash without having to sell the home or make monthly payments. ### In a reverse mortgage, who typically pays the loan back? - [ ] The homeowner in monthly installments - [ ] The federal government - [x] The equity in the homeowner's property - [ ] The borrower's heirs > **Explanation:** In a reverse mortgage, the loan is repaid through the equity in the homeowner's property. The repayment is triggered when the homeowner sells the home, moves out permanently, or passes away. ### What financial obligation do reverse mortgage borrowers have each month? - [x] None - [ ] Monthly loan repayments - [ ] Interest payments - [ ] Mortgage insurance premiums > **Explanation:** One of the key features of a reverse mortgage is that borrowers have no monthly financial obligations to pay the loan back. The repayment of the loan is deferred until specific conditions are met, such as selling the home, moving out permanently, or passing away. ### Why might a reverse mortgage be considered beneficial for retirees? - [ ] It requires high monthly payments which can aid cash flow - [ ] It limits the borrower's control over their property - [x] It provides additional funds without the need for monthly repayments - [ ] It must be repaid within a short period, stabilizing interests > **Explanation:** A reverse mortgage can be beneficial for retirees as it provides them with additional funds that they can use at their discretion, without the obligation of making monthly payments. This can make managing expenses easier in retirement. ### Which of the following is NOT a condition under which a reverse mortgage is repaid? - [ ] The homeowner sells the house - [ ] The homeowner passes away - [x] The homeowner pays off other debts - [ ] The homeowner moves permanently to a retirement home > **Explanation:** A reverse mortgage is generally repaid when the homeowner sells the house, moves out of the house permanently, or passes away. Paying off other debts does not trigger the repayment of a reverse mortgage. ### Can a homeowner’s heirs be responsible for repaying a reverse mortgage? - [ ] Automatically, regardless of conditions - [ ] No, the loan is always forgiven - [x] Yes, if they wish to keep the property - [ ] Only if the homeowner is under 62 at the time of death > **Explanation:** A homeowner's heirs can be responsible for repaying a reverse mortgage if they wish to keep the property after the homeowner's death. If they do not wish to keep the property, the home can be sold to repay the loan.