Easy to Mortgage

Reverse Mortgages – Get The Money You Need – Part 1 Of 4

Reverse Mortgages are loans that allow you to borrow back the equity in your home. Just as you once paid the bank, the bank now pays you. Isn’t that a nice change?

If you are 62 years of age or older, they are a way to borrow against the equity in your home (the value of your home minus any mortgage debt you now have) to provide you with tax-free income. Seniors struggling because of falling retirement account balances and increases in the cost of medical care are looking for new sources of cash to maintain their standard of living.

The amount you can borrow depends on your age, the value of your home and interest rates.

Fortunately, you continue to own and live in the home for the life of the loan. There are no loan payments until you sell the house, die or move out for a period of a year or longer.

You can get the money as a line of credit, a monthly payment, a lump sum, or a combination of all of these. A monthly payment is a guaranteed of income for as long as you live in your residence, whereas; a lump sum could be used as you wish, such as to purchase an annuity that could provide you with a life long income. With a line of credit, you don’t have to pay interest on money you haven’t withdrawn and your money will earn interest while it’s waiting to be used by you.

A Reverse Mortgage might be worth considering if:

-You plan to stay in your home.
-You want to enhance your lifestyle and enjoy your golden years.
-You want funds for major expenses such as medical bills, or for major home repairs.
-You need additional income to live on and your only significant asset is your home.
-You want the peace-of-mind that comes from knowing your financial needs are taken care of.
-You own your home free and clear, or you have a small first mortgage.
-You don’t plan to leave your home to your heirs.

What are some of the potential advantages of Reverse Mortgages?

-It can help you maintain your financial independence or improve your quality of life.
-You can stay in your home and keep title to the property.
-The money you receive is tax-free and is not usually considered income.
-You make no payments until the loan ends or the house is sold.
-Your income is not a consideration in obtaining the loan since there are no payments until the loan ends.
-You cannot owe more than the value of the home at the end of the loan.

If you’re a senior, I hope you can see the benefits of taking advantage of this income source, if you need it.

This is a four part series, one each week right here, same location. In Part 2 next week, we’ll explore much more, including the drawbacks of a reverse mortgage and what types are available.

You’ve made the decision that you need some extra assistance in meeting your monthly financial obligations. One of the best options for those over sixty-two years of age who own their own home is a reverse mortgage. Instead of you paying the bank each month, the bank will actually pay you. The loan can be taken out as a lump sum, a fixed monthly payment or as a line of credit. You do not have to pay back the loan until you sell your home or move out permanently. There are many reverse mortgage lenders such as banks and credit unions that you can contact to obtain details about these loans. Rates may vary so you will want to check around with various banks before deciding. There are several types of reverse mortgage loans and they include the following:

Home Equity Conversion Mortgage – HECMs are the oldest types of reverse mortgage loans and the most popular. They are insured by the federal government through the Federal Housing Administration, which is part of the U.S. Department of Housing and Urban Development. The amount of money you can take out as a reverse mortgage loan depends upon your age, the appraised value of your home, current interest rates and the location of your home. The older you are and the higher the equity (what it would sell for less what you still owe), the higher the loan amount can be. For 2006, the loan limit for a home in a rural area is 200,160 while the limit for high cost areas is 362,790.

Another reverse home mortgage product that you can obtain from a lender is the Fannie Mae Home Keeper. Fannie Mae is the largest investor of home mortgages in the country and a major investor in reverse mortgages. Fannie Mae developed its own reverse mortgage product as an alternative to the HECM to address the needs of customers who had a higher property value on their home. Home Keeper loans can be larger than HECMs because their mortgage limit is higher. Another Fannie Mae reverse mortgage product is the Home Keeper for Home Purchase program. This is for seniors who wish to use the reverse mortgage loan to buy a new home. For example, let’s say someone sold his home for a 60,000 profit and wants to buy a new house for 100,000. He could get a reverse mortgage using money from a Home Keeper loan so he would not have to use his savings to purchase the more expensive home.

The opportunities are endless for borrowing against the equity in your home from reverse mortgage lenders you can depend upon.

A reverse mortgage is a special type of loan that home owners can sometimes get to convert the equity in their homes to cash. Basically, a reverse mortgage is a type of loan that provides you with a monthly income, a lump sum of cash, or a line of credit.

This reverse mortgage concept was for retirees keen in keeping their homes but whose incomes aren’t sufficient to support their lifestyle, and is used to help people on low incomes to pay for daily expenses, huge medical bills or the odd house maintenance and repair costs. Reverse mortgage also pays off your existing loan, if you have any.

Reverse mortgages appeal to older adults because of the lump sum loan advances, which are not taxable. It does not generally affect your Social Security or Medicare benefits. Another advantage of reverse mortgages is the different withdrawal options that you can choose from. These options include lump sum pay outs, line of credit, monthly payments, or any combination of these three. So if you were eligible to borrow $250,000 on a reverse mortgage you could select to receive $75,000 up front to cover current expenses, and hold the rest as a line of credit that you can use whenever you need it. This flexibility of reverse mortgages can significantly improve you financial independence during retirement

The disadvantage is the relative cost of a reverse mortgage. Reverse mortgages tend to be very expensive when compared with a traditional mortgage. This is due to the rising-debt nature of the reverse mortgage concept. Another disadvantage is the payments from a reverse mortgage loan can can affect the eligibility for old age pensions, or supplemental Social Security income.

Considering these facts, reverse mortgage are definitely an option to look up to if you are looking for ways to supplement your current income. As with any financial decision, sought advice from trained and licensed financial professional to analyze and determine if a reverse mortgage is right for in your unique circumstances.

Refinancing After Bankruptcy – Tips On Refinancing Your Home Mortgage After A Bankruptcy

Have you filed bankruptcy since you bought your home? Are you now looking to take advantage of lower interest rates by refinancing your home? You will probably soon realize how much more difficult it is to finance or refinance a home after a recent bankruptcy. It is not impossible though. There are many companies online that will help you refinance your home.

Here are some tips to consider when refinancing after a bankruptcy:

Even though interest rates have dropped, you may not be able to get a lower interest rate than when you bought initially – If you had decent or good credit when you bought your home originally, even though interest rates have lowered recently, you may not be able to qualify for an interest rate any lower than you had when you bought your home originally. With a recent bankruptcy, your interest rate is going to be quite a bit higher than before. There are many mortgage calculators available online that will help you analyze your current payment and interest rate and tell you if it is better for you to refinance your home or not.

Watch out for pre-payment penalties – Even if you can qualify for an interest rate that is lower than what you currently have, make sure you don’t get yourself into a loan with a pre-payment penalty. If you have a loan right now free and clear of any pre-payment penalties, it would be a big mistake to lock yourself into another loan for 6 months to 3 years or more. If interest rates drop again or you need to move, you will have to pay about 6 months of payments or interest in order to get out of the loan with a pre-payment penalty.

Beware of predatory lenders – There are many lending scams on the rise, make sure you are dealing with reputable mortgage lenders. Watch out for signs of shady lending practices.

Shop around – Get loan offers from at least 3 lenders. This is a good rule of thumb with any bad credit loan. When you can get multiple loan offers, you can compare interest rates and fees. Make sure you do not accept the first loan offered to you.