Loan Officer Practice Exam 2025 – Comprehensive All-in-One Guide for Exam Success!

For fixed-rate Home Equity Conversion Mortgages (HECM), borrowers typically receive the single disbursement lump sum payment plan. This means that at the time of closing, borrowers can access the entire amount of their loan in one large payment, which is particularly advantageous for those who have specific needs for a significant amount of funds immediately, such as paying off existing debts or making major home improvements.

In a fixed-rate HECM, the nature of the loan structure generally limits the payment plans available to the single disbursement option, as borrowers can take advantage of the fixed interest rate and simpler terms offered. This differs from other payment plans like scheduled monthly or modified tenure, which allow for periodic disbursements over time, but these options are associated with adjustable-rate HECMs.

Thus, the single disbursement lump sum is the correct choice for borrowers who opt for fixed-rate HECM mortgages, as it aligns with the terms and conditions defined for that specific loan type.