New Jersey Real Estate Exam Practice Question
Elderly homeowners paid off their loan 6 years ago. Due to a limited fixed income, they would like to borrow on the equity of the home. Which type of loan would be most desirable?
Correct Answer: B
Rationale: A reverse mortgage is ideal for elderly homeowners seeking to access their home equity without monthly repayments, allowing them to maintain their fixed income. This type of loan converts part of the home’s equity into cash, which can be used for living expenses or other needs.
An open-end loan allows for borrowing up to a certain limit but requires regular payments, which may not suit those on a fixed income. A blanket loan covers multiple properties, making it unsuitable for homeowners with a single residence. A growing-equity loan involves increasing payments over time, which could strain limited budgets. Thus, a reverse mortgage best meets their financial needs.
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