A characteristic of a HECM loan is that there is no required repayment until the borrower dies.

A characteristic of a HECM loan is that there is no required repayment until the borrower dies.

• A. Annual payments
• B. No repayment until death
• C. Repaid in 5 years
• D. Repaid upon retirement

Answer: (B)

A HECM, or reverse mortgage, lets a homeowner age 62 or older access home equity without making monthly payments. The loan balance grows over time as interest and fees accumulate, and there are no required installments during the borrower's lifetime. Repayment becomes due when the borrower dies, permanently moves out, or the home is otherwise no longer the primary residence (often when the home is sold). This is why the statement that there is no repayment until death is a defining characteristic. Heirs can choose to repay the loan to keep the home or allow the sale of the home to satisfy the loan. The other options imply ongoing payments or a fixed repayment term, which do not apply to a HECM.

A HECM, or reverse mortgage, lets a homeowner age 62 or older access home equity without making monthly payments. The loan balance grows over time as interest and fees accumulate, and there are no required installments during the borrower's lifetime. Repayment becomes due when the borrower dies, permanently moves out, or the home is otherwise no longer the primary residence (often when the home is sold). This is why the statement that there is no repayment until death is a defining characteristic. Heirs can choose to repay the loan to keep the home or allow the sale of the home to satisfy the loan. The other options imply ongoing payments or a fixed repayment term, which do not apply to a HECM.