By Robert Griffin
There are many common misconceptions regarding the effectiveness of fixed rate Home Equity Conversion Mortgages (HECM) or reverse mortgages. Many mature Americans, over the age of 62, are still unsure if using a fixed rate HECM is a better choice than using an adjustable interest rate reverse mortgage or ARM. Both reverse mortgage programs offer benefits to you, the borrower, but the fixed rate reverse mortgage offers a better product choice which is similar as that of the standard fixed rate forward mortgages.
The most common misconceptions and questions asked by mature Americans searching for the best options for the use of fixed rate reverse mortgage versus adjustable interest rate reverse mortgage are:
Can a reverse mortgage with fixed rates be closed- or open- ended? According to the U.S. Department of Housing and Urban Development (HUD) fixed rate HECMs are currently closed-ended credit but it must be reflected in the Note and Loan Agreement. What this means for you is that you are entitled to receive a lump sum payment at the closing of your fixed rate mortgage agreement. You will be able to plan for your monthly expenses better, take that long needed vacation or do with it as you please. Read More…
By Josh Borba
Previously, we explored all the upfront fees involved in a reverse mortgage. Now, of equal importance, we explore continual costs that are accrued during the life of the loan. These costs include the interest rate, the ongoing HUD Mortgage Insurance Premium (MIP), and the monthly service fee.
The single item that may cost the most over the life of the loan is the interest rate. With a reverse mortgage the borrower has the option to obtain a fixed rate or an adjustable rate. Since the rate is known on the fixed rate, it provides the security of knowing exactly what the loan balance accrual will be at any point in time. The adjustable rate is based on one of two indices: LIBOR (London Inter-Bank Offered Rate) or CMT (Constant Maturity Treasury) plus a margin that currently ranges from 2.75% to 3.75%. It is important to remember that the interest accrues as a compound rate, meaning that borrowers will be accruing interest on interest. It is very important to look at an Amortization Schedule to help understand how the loan balance will grow over time. Read More…
By Joe C Bailey
Getting a reverse mortgage can mean the difference between living comfortably and living day to day. But, before you commit to, you must also understand the disadvantages. So, let’s first take a quick review, then take a look a the disadvantages.
What is a reverse mortgage?
A reverse mortgage is a home loan that lets you take some of the equity in your home and convert it into cash. So, as opposed to a regular mortgage where you pay every month, a reverse mortgage pays you! Sounds great, it’s almost like winning the lottery.
OK, now that we know the good news, here are some of the disadvantages to consider: Read More…
By Aditya Thakur
Mortgages have assumed a number of characters from the time of their inception. The traditional mortgages used to be of the repayment type. Every month the mortgagor used to pay a certain amount towards both principal and interest. Sensing the hardships that people have to face in making these payments, mortgage providers came up with interest only mortgages. But the present day customer is more pampered. He needs a mortgage where he enjoys the cash, but is not required to pay a penny towards the repayment.
A reverse mortgage is a perfect solution to such requirements. It allows a homeowner to plough the equity in his home to get cash. While the borrower enjoys cash on the mortgage, he is rid of any monthly payments. Read More…
By Charles Essmeier
The home equity loan has become quite popular in the last five years, and Americans have tapped into the equity of their homes in record numbers. The reasons vary, although home improvement and debt consolidation are the most common reasons for borrowing against a home’s equity.
In the last fifteen years or so, a new twist has arrived in the home equity market –- the reverse mortgage. Like a traditional home equity loan or line of credit, a reverse mortgage allows you to borrow against the equity in your home. Unlike those other options, you don’t have to make payments in order to pay it back. The repayment takes place when you die, when you move, or when you sell your home. You must be at least 62 years of age to qualify, but unlike other loans, you do not have to have any appreciable income in order to get a reverse mortgage. Read More…
By Caleb Liu
There are plenty of reverse mortgage companies out there. All you have to do is search online and you will get hundreds of hits. Yet not all of them are worthy of your business. There are plenty of scams found out there in this type of business so you need to be careful. Take the time to research the experience other people have had with given business. That way you won’t be taken for a ride when you are trying to fix your finances.
Instead of just entering keywords of reverse mortgage companies into the search engines, go a step further. Enter National Reverse Mortgage Lenders Association or NRMLA enter the search engine instead. Here you will find very reliable information from a credible source. You will be able to get all the information on how a reverse mortgage works. They have all the tools you need too including reverse mortgage calculators. They have the most comprehensive listing of trusted lenders as well for you to explore. Read More…
By John H. Drake
While you should be aware of the dangers of a reverse mortgage before getting involved with one, a reverse mortgage can also be a life saver for many. A loan of this type is also particularly popular with those who have retired and are cash poor but have a lot of equity in their home.
How does a reverse mortgage work?
They work much like the name implies. If you have equity in your home you can get a reverse mortgage which will allow you to pull out that equity in the form of a one-time lump sum, monthly payments, or a line of credit to be pulled out as you need it. It’s like a mortgage but in reverse. Instead of paying money each month, the bank pays you from the equity in your home.
What are the pros of reverse mortgages? Read More…
By Josh Borba
Picture this… you’re a senior homeowner and nearly every time you go to your mail box, you get 1-5 solicitations for a reverse mortgage. You keep all the postcards and letters handy in case you decide to make a decision to proceed with a reverse mortgage. You’re starting to learn a lot about the program just from all the direct mail pieces you have received. Your phone is starting to ring almost daily with reverse mortgage telemarketers. You hear the buzz on the news and with your friends that reverse mortgages have created. You see TV commercials with Robert Wagner, James Gardner, and Pat Boone among many others. You now have a stack of solicitations higher than three Los Angeles phone books and your interest has peaked. You know you want to start to look into a reverse mortgage but you don’t know what steps are involved or how to you proceed with a reputable company? Yes you do have hundreds of mail pieces, but what company will truly offer you the best service and best fee structure.
The above scenario is very common. The entire reverse mortgage process can be very overwhelming for some people. The decision of what company to choose to the process itself can cause a lot of seniors who would greatly benefit from a reverse mortgage to turn a shoulder and not even explore the idea. Fact is, with the right reverse mortgage lender, a reverse mortgage may very well be the easiest transaction a lot of seniors have ever been a party to.
The first step is to choose a reputable company. Look towards friends and family who may have received a reverse mortgage. If you are unaware of anyone who has received a reverse mortgage, or perhaps you friends or family didn’t have a good experience with their reverse mortgage professional, look to NRMLA (National Reverse Mortgage Lenders Association). Members of NRMLA have subscribed to their code of ethics and will always deal in a professional manner with their senior clientele. Read More…
By Patricia Pearce
Reverse mortgage loans have been around for a while, but until recently they haven’t been as popular as they are now. These types of loans are designed for use by senior citizens, 62 years of age or older. The general idea is that a lot of people have lived in their homes for years, paid their mortgages, and built up quite a lot of equity. They don’t want to move, yet they can’t have the benefit of the equity they’ve created.
Reverse mortgage loans let them tap into that equity.
In some sense, reverse mortgage loans are kind of like home equity loans, which let you get money out of your house without selling it. Unlike home equity loans, however, there are no minimum or credit requirements. Read More…
By Jonathan Grigson
A reversible mortgage is a loan taken out using the equity in your residence that you are not required to pay back for as long as you reside in the house. A reverse mortgage is distinctive from contrasting kinds of loans considering that the repayment, comprising accumulated interest, is not needed up to the time the householder passes away or elects to sell the residence. It is primarily avaliable to householders aged 62 and above, to release the value in your home into a tax free proceeds without selling, yielding the title, or paying out monthly mortgage premiums. Because there are no monthly premiums, there is no revenue or credit suitability needed. This can be an excellent source of additional income, as long as you are conscious of its disadvantages and possible risks, and all the corresponding charges. Through a reverse mortgage you will keep the title to your residence and will continue to be accountable for settling the property taxes, insurance protection, and for the overall maintenance of the estate.
Lenders of Reversible mortgages place their efforts on satisfying the elderly demographic, offering reverse mortgages to just those individuals whom are 62 years of age and older. This can be a better choice as long as the attracted individual possesses and lives in their household. Lenders will base the total they will loan to you on the pretense that your residence will go up in worth every year, therefore if your residence increases in value quicker than they are expecting you will not in reality go through your equity as you would imagine. These flexible mortgages also guarantee that a householder will remain in his or her house for as long as they exist and can therefore be an outstanding income answer for retirees with highly precise requirements. Read More…
