| |
| |
|
Mortgage & Refinancing Information |
|
|
|
Advantages and Disadvantages Of A Reverse Mortgage
Betty and John, are in their mid-seventies and are currently weighing the advantages and disadvantages of a reverse mortgage as a way of freeing up some cash. The couple purchased their home 45 years ago for about $14,000 since then home values have skyrocketed and recent single family homes in their neighborhood have been selling for a minimum of $160,000. Like Betty and John, if you're considering a reverse mortgage it's important to do some research prior to making a decision. You not only need to understand the basic principles of this kind of mortgage but you also need to look at all the advantages and disadvantages of a reverse mortgage. Essentially a reverse mortgage is a loan that permits homeowners 62 years of age and older to borrow against the equity in their homes without having to sell it. Further, you don't have to give up the title or take on a new monthly mortgage payment. A reverse mortgage loan is tax-free and needs only to be repaid when the borrower (or in the case of Betty and John, when the surviving spouse) dies or sells the home. At which time, the reverse mortgage loan must be repaid in full, including all interest and other charges. When examining the advantages and disadvantages of a reverse mortgage it's also important to consider both the process and the related costs of obtaining a reverse mortgage. Unlike a conventional mortgage, with a reverse mortgage, the homeowner (the potential borrower) must meet with a reverse mortgage counselor. References for counselors can be obtained from banks offering reverse mortgages or the U.S. Department of Housing and Urban Development (HUD). The purpose of these meetings which may take place in person or on the telephone is for the homeowner to learn about reverse mortgages and discuss alternative options. It also helps you decide which kind of reverse mortgage may be best. As well as exploring the advantages and disadvantages of a reverse mortgage, it's wise that the potential borrower, also compare costs between various lenders and request a Total Annual Loan Cost estimate for each. Further to discussing the advantages and disadvantages of a reverse mortgage with a counselor, you also need to understand that there are certain costs involved in the reverse mortgage process. Costs may include application fees, closing costs, insurance, appraisal fees, credit report fees, and quite possibly a monthly service fee. Remember too that since a reverse mortgage allows you to continue living in your home, you're still responsible for property taxes, insurance and repairs. If these payments are not maintained, the loan could become due in full. A reverse mortgage may also affect eligibility for federal or state assistance as well as Medicaid. That said, any reverse mortgage money that is received is tax-free and does not affect Social Security or Medicare benefits. The condition of your home is also a large part of the approval process. It must be structurally sound and in good repair. If it's determined that home repairs need to be done, the costs can also be financed through the reverse mortgage loan. The total amount a homeowner can borrow all depends on the kind of reverse mortgage selected, how much equity is in the home, the loan's interest rate and most importantly, the age of the borrower. Typically the older a person is, the more they can expect to receive. A borrower can receive reverse mortgage payments in one of the following ways: in a lump-sum payment; fixed monthly payments; a line of credit or a combination of any of the above. Most homeowners go for the line of credit option which allows them to draw on the loan whenever money is required. Paul Jesse is a retired government employee, small business owner and the author of many articles on finance and internet marketing. Visit his website at: http://www.sheamarketing.com/financial
MORE RESOURCES:
Mortgage-Refinance - Google News |
|
|
|
RELATED ARTICLES
Why Refinance Back into a 30-Year Loan? One of the biggest reasons homeowners refinance their mortgage is to obtain a lower interest rate and lower monthly payments. By refinancing, the borrower pays off their existing mortgage and replaces it with a new one. How To Save Hundreds A Month On Your Mortgage When it comes to American spending habits, the sad truth is that most people don't put their financial assets to the best use. One of the greatest examples of this is the home mortgage. 5 Steps to Getting on Top of your Mortgage Getting on top of your mortgage so you can pay your loan off faster and potentially save thousands of dollars on your home loan is possible with a plan and consistent effort. There are mortgage reduction strategies that you can put into place that will ensure that your loan is paid off more quickly without putting a huge strain on your current budget. Mortgage Soup Looking for home mortgage loans can get confusing with the alphabet soup of mortgage loans programs available today. Most of these programs are just variations of fixed rate and adjustable rate mortgage loans. The Top 5 Things You Must Know Before Applying for a Mortgage You've been thinking about buying your own home for quite a long time, and now you're ready to take the plunge. You've been saving money for a down payment, and you know the next step is preparing to apply for a mortgage. 7 Credit Improving Steps You Must Take Before Applying For A Mortgage If you think you have good credit, think again. Chances are there is something on your credit report that can effect your credit rating; this type of news is particularly alarming if you are shopping for a loan or applying for credit. Mortgage Elimination- A Horrible and Sure Way to Lose Your Home to Foreclosure "Own your home free and clear in 3 to 4 months. Note paid in full!"How does this statement sound to you? Does it bring out a sentiment of grand larceny or does it peek your interest as a means to quickly and legally increase your personal net worth? Would it be moral to cancel a debt you made in such an easy and unfathomable manner? Most importantly, if you were behind on your mortgage would you pay someone $3,000 to perform this elimination service for you?Unfortunately, the answer for many homeowners is "Yes". Home Equity Lines of Credit Vs. Other Conventional Loans When it comes to getting money, you have two basic options. If you are a homeowner you can choose to take out a home equity line or credit (HELOC), or you can take out a conventional loan. Remortgage Serves To Rewind The Reimbursements Of Mortgage It takes a mighty big effort to secure a home and even mightier to convert it into an earning member. Can a home be converted into an earning member? In contemporary configuration anything is possible! You must be aware of the advantages of mortgage, for you certainly have opted for that before going for a remortgage. Buying A Home With No Money Down or Bad Credit - PMI Can Make It Easier Private mortgage insurance is an excellent method for homebuyers who have trouble saving money, are short on money, or have bad credit, to get into a home now. Private mortgage insurance is provided by a third party to protect the lender in the mortgage contract. Mortgage Brokers or Banks: Which is Right For You? When you're looking for a home loan, you might work with an officer at a bank or other lending institution, or you might choose to work with a mortgage broker. The end result is the same - a new house, but the two types of jobs differ. Taking the Time to Find the Best Home Improvement Loans The best home improvement loans usually aren't going to be the first loans that you encounter, but if you're in the market for a loan to pay for repairs, expansions, or improvements to your home or other real estate then it might be worth your time to shop around before you decide on one loan or another.Shopping around for the best home improvement loans isn't a lot of work, though it can be a bit time consuming and requires quite a bit of legwork. Online Mortgage Loan Companies Are Convenient There are many reasons to use the internet to take care of your mortgage loan needs. Online mortgage companies can give you quick answers to your mortgage application and can often times give you an answer of whether or not you have been pre-approved within 24-48 hours after you submit your mortgage application. Mortgage Terms Explained When you are hunting for a mortgage, you will find that there are many different types of mortgages available. I will list some of the more common ones and their uses. Using a Mortgage Refinance Company Online Online mortgage companies make refinancing convenient and competitive. By researching mortgage rates and lenders online, you can be assured that you have the best refinancing rates. What Your Mortgage Lender Is Not Telling You About Accelerated Mortgages For years, mainstream banks and financial advisors have been recommending that you pay extra cash into your mortgage account in order to cut down the huge interest amount and reduce the period over which you pay back the loan.For example, if you borrow $200,000 over 30 years at a rate of 5%, your monthly repayments would be around $1074. Why Choose a Home Owner Loan? Most people choose a home owner loan as it can release the capital that is tied up in their property for immediate use. The loan can be used for any purpose, and is available to anyone who owns their home. What is an Offset Mortgage? An offset mortgage is very similar to a current account mortgage - but instead of having everything all in one account, all accounts are held separately.The offset mortgage concept treats your money as one giant pot, with each element (mortgage, savings, current account etc) separate to the rest. Recent Bankruptcy? Its Not Impossible to Obtain a Home Loan Because the new bankruptcy laws go into effect on October 17, 2005, more Americans than ever are filing for relief using the federal bankruptcy laws. The vast majority are simply overextended and cannot possibly repay the obligations they have open. Home Loans For People With Bad Credit - When you Should Wait and When You Should Get a Home Loan Home loans may seem like a bad idea for people with bad credit, but there are times when a home loan can help your credit score and your budget. To know if a home loan is best for you, consider factors such as your current financial situation, current rent payment, and future goals.
|
| Good Credit Loans | home | site map | School Bus Clothing | Florida Pool Heating |
| © 2006 |
