Mortagage informatiom centre and much more easy foryou understanding about mortgage: January 2013

Thursday, 31 January 2013

mortgage and home finance

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Learn About Reverse Mortgage Disadvantages Before Signing On The Dotted Line July 2, 2012
How Does a Reverse Mortgage Work? Learn The Basics, The Benefits And The Disadvantages December 20, 2012
How Does a Reverse Mortgage Work? How to Choose the Right Payment Option December 21, 2012
How Does a Reverse Mortgage Work? Is It Worth The Risk? December 22, 2012
How Does a Reverse Mortgage Work? Learn More about the Myths and Misconceptions about Reverse Mortgages December 23, 2012

Learn About Reverse Mortgage Disadvantages Before Signing On The Dotted Line July 2, 2012
How Does a Reverse Mortgage Work? Learn The Basics, The Benefits And The Disadvantages December 20, 2012
How Does a Reverse Mortgage Work? How to Choose the Right Payment Option December 21, 2012
How Does a Reverse Mortgage Work? Is It Worth The Risk? December 22, 2012
How Does a Reverse Mortgage Work? Learn More about the Myths and Misconceptions about Reverse Mortgages December 23, 2012

Learn About Reverse Mortgage Disadvantages Before Signing On The Dotted Line

Posted on 02 July 2012.

While you have probably heard a lot of the advantages being mentioned for reverse mortgages it’s time that you learned about the reverse mortgage disadvantages as well. It may seem like an instant solution for your retirement efforts but there are some hidden downfalls to the program. It is important to look at both sides of the coin before making a final decision about a reverse mortgage and whether it really is the best solution for you.
Future debt
One of the big downfalls to this type of mortgage is the effect it can make on the inheritance you leave behind. If something should happen to you before the mortgage is paid off this debt is passed on to your heirs. In the majority of cases this will mean that the home will have to be sold to pay off the mortgage. If there’s anything left over after this mortgage is paid off it will fall into the hands of your heirs, but in some cases there may not be much left behind. Of course, if you don’t have any family that you plan on leaving this money to, or have family that are already very financially secure, this is not an important point that you need to keep in mind. You’ll be able to look at the picture based on your retirement needs only and not on what you will be leaving behind to others.
Remaining in your home
You are not allowed to leave your home until the reverse mortgage has been totally paid off. If you have any uncertainty about the future and where you will be living it would be best to avoid this type of mortgage and play it safe. If you have been thinking of a move you will not be able to leave your home in the near future. You’ll basically have to plan to be committed to staying in your home until the mortgage term is finished.
Reverse mortgages can be quite confusing
Not only are you going to have to learn what your responsibilities are as a mortgage holder you’re going to have to learn what responsibilities the lender will hold as well. You’ll have to choose between different terms and conditions and will want to take a look at the various interest rates. Just like a conventional home loan, there are lots of terms and definitions as well as concepts to learn. You’ll need to be prepared to look at these things in full detail to make sure that you are making the right choice in the end.
It can be costly
Not only can a reverse mortgage be confusing but it can also become very costly as well. There will be loan fees to pay, appraisal fees, insurance, closing costs etc. As well, you will still be responsible for repairs on the home, insurance and property taxes. It’s always advisable to find out all of the hidden costs before setting up an application for the loan. You certainly don’t want to get hit with these extra costs once you have made the decision to go ahead and get a reverse mortgage.
Eligibility for assistance
You should be aware that being accepted for a reverse mortgage might affect your eligibility for state or federal assistance such as Medicare or Medicaid. In some cases it can also affect eligibility for Social Security benefits. You should first find out about the eligibility requirements for any type of assistance you may currently be on or are expecting to receive in the future. These requirements will vary from one state to the next.
Paying off your balance
Another one of the reverse mortgage disadvantages is you will be required to pay off your current mortgage balance when you take out the reverse mortgage. Depending on how much balance is left on your existing mortgage, this may become a big issue. It’s best to look at this type of financial situation with an accountant first before going ahead and signing any type of contract.
The tax write-offs
In most cases you will not end up getting a form every year saying that you paid your mortgage interest. This will only come if you pay the interest on the mortgage, but that happens usually only when the house gets sold. For most reverse mortgages you will not pay interest but rather just accrue it. You really can’t expect any tax relief by taking out this mortgage and again, you’d be better off talking to your accountant about a reverse mortgage and how it will affect your taxes.
In the right circumstances a reverse mortgage can be the best decision to mak

How Does a Reverse Mortgage Work? Is It Worth The Risk?

Posted on 22 December 2012.

If you are 62 or older and feel that you may qualify for a reverse mortgage you may be wondering to yourself, “How does a reverse mortgage work?” There has been a lot of talk about reverse mortgages lately and you may be thinking that this type of mortgage would be a good idea for your own situation. Here is some data about reverse mortgages for you to look at so that you can make a more informed decision as to whether you’d like to go forward with the idea or whether it’s something that simply won’t work for you.
Do you qualify?
This is the first thing to get out of the way when you’re wondering “How does a reverse mortgage work?” There are certain qualifications that must be met and if you don’t meet them then there’s no use in going forward with your application anyway.
Here are the requirements for getting approval on a reverse mortgage.
1. You must be a minimum of 62 years old.
2. You must meet minimum credit qualifications.
3. Any current liens on the property must be fully paid off at the closing.
4. The house must be totally paid off or have a low balance owing.
5. If any names are listed on the deed they must also sign the application.
Who issues a reverse mortgage?
Reverse mortgages are issued by the Federal Housing Administration.
How does a reverse mortgage work?
This mortgage is designed to give you access to the equity in your home without having the responsibility of making monthly repayments. You will still be responsible for paying your homeowner’s insurance and property taxes due and you must keep the property in fairly good condition. If you have payment that you regularly make to a Homeowner’s Association, these must be kept up as well. You will also be expected to stay in the property for as long as the mortgage agreement remains in effect.
How payments are made
You have choice when it comes to your reverse mortgage payments. You may choose to get the entire payment as a lump sum, take out a line of credit, receive a monthly income or use a combination of these choices.
The interest rates
Just as you’d expect with a conventional mortgage, there are different interest rates and terms available for reverse mortgages. There are adjustable rates annually or monthly and fixed rates available. The rates will be determined by the HUD rates at the time and these rates remain constant for all lenders.
There are different programs available for reverse mortgages. There are private products available as well as the Government HECM program. Interest rates may vary from one program to the next.
Counseling certificate
If you’re planning on getting a reverse mortgage you will first have to attend a counseling session held by a specialist. This counseling is program-specific and is based on who your lender is. This counseling can be done in person or over the phone. Once you have the certificate you will hand it over to your lender so that he can continue to process the loan.
This counseling has been put in place to make sure that you understand all the ramifications of taking out a reverse mortgage. You will have the chance to ask questions and then you’ll need to make sure that you follow up with any unanswered questions that you may have later. Taking out a reverse mortgage is a big step and you’ll want to be 100% sure that you are making the right decision.
Looking at your choices
Basically, when you take out a reverse mortgage, it can make your retirement a lot simpler. You won’t have to worry about making any more mortgage payments and can instead relax and enjoy the money that is coming your way every month. This does not mean, however, that it is always a wise decision to make.
The one thing that you need to keep in mind is the inheritance money that you want to pass on to your children. If you have no children this may not be a concern for you. If passing down a good inheritance is important to you, a reverse mortgage can certainly affect it. If you take out this type of mortgage and something were to happen to you in the near future, the debt that you have incurred will be passed on to your heirs. If something should happen health-wise that would force you to leave your home, you’ll still have this large debt to pay since one of the conditions of the reverse mortgage is to remain in your home.
Now that you understand more about reverse mortgages and have had your question,” How does a reverse mortgage work?” answered in general, it’s up to you to decide whether it is wise to go forward or not. In some situations reverse mortgages are the perfect solution for retirement and in other cases they can end up being disastrous. You’ll have to look at your own personal situation and see how a reverse mortgage would work for you.

Sunday, 27 January 2013

How Does a Reverse Mortgage Work? The Top 8 Questions Answered

When you’re first starting out and learning how does a reverse mortgage work you probably have some questions about these mortgages even after reading through some of the material. Here are the top 10 questions that are commonly asked and their answers so that you can better understand this type of loan.
1. How do I qualify?
You have to be at least 62 years old and either own the house you’re living in or owe only a small balance on it. If you live in a mobile home it may or may not qualify for a reverse mortgage. You’ll have to ask about your specific mobile home to find out if it is accepted or not. As well, there can only be three borrowers on the loan and each person must reside in the home permanently.
2. When do I need to pay it back?
You are not going to have to pay anything back on this loan as long as it remains active and that he is indeed the beauty of it. Instead of making repayments every month on your small balance you will be receiving money instead. The loan will be repaid once you sell the property, pass away or move out of the house. At this time the money earned from the home sale will be used to pay the loan off including all costs and accrued interest. At no time will your assets be touched to pay back the loan and the assets belonging to your heirs will be safe as well.
3. Is this loan more expensive than a regular loan?
Yes, it is. When compared to a regular mortgage it is more expensive but that is to be expected. The lender is not expecting to get his money back for many years in some cases so needs to charge a higher rate to make up for this time factor. You’ll be able to choose between different interest rates, just like you would with a regular loan, to find the best deal. You’ll have your choice between a variable or a fixed-rate reverse mortgage and will have to examine these options to see which one would be the best in your case. When you’re figuring out how does a reverse mortgage work, it’s definitely not a case of “one-size-fits-all”.
4. How much am I allowed to borrow?
The maximum allowed is $625,500 but your loan will be determined based on three different factors: your age, the interest rate and the home’s appraised value. Basically you will receive more money if you’re home is worth a lot and the interest rate is low.
5. How will I be paid?
You have different options to choose from to receive your payments. You can either opt to receive monthly payments, a lump sum payment or a line of credit. If you still owe money on your home, however, you won’t be able to choose the monthly payment package since you will have to use either the line of credit or the lump sum payment to pay off the remaining balance.
When making your choice you’ll also want to make sure that you’re taking taxes into account. You may want to consult with an accountant first before making a final decision to find out which option is best for you.
6. Do I need to stay in the house?
Yes. This is one of the conditions for taking out a reverse mortgage. You’ll need to stay in the home until the loan period has ended. If this is not possible, the reverse mortgage can be held in default and the home sold.
7. Can I get a reverse mortgage on my vacation home?
No, you can only apply for a reverse mortgage on your principal residence. Vacation homes will not be considered for this type of loan. As well, if you have an investment property it will not qualify.
8. Do I need to have my heir’s approval?
No. As the homeowner you have the right to make the decision on your own. Although it would be nice to let your heirs know what you are planning, they have no way of stopping you from or forcing you to take out a reverse mortgage.
It is important that you do your own research on the different types of reverse mortgages available before making a firm commitment to go ahead and get one. There are a lot of questions that you may need to ask and it’s best to find a professional that will sit down and explain everything to you in detail. You certainly don’t want to feel rushed when you’re learning how does a reverse mortgage work. You’ll need to get the proper answers so that you can feel confident when it’s time to make your final decision.
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