Mighty Mortgages

As the baby boomers enter their senior years, there are more people than ever looking into reverse mortgages. They hope to use the income to finance their retirement so it is very important that they consult with honest reverse mortgage brokers. You need to be able to trust and rely on them to be forthcoming with respect to fees and terms.

For example, application fees are not always refundable. The application fee includes and appraisal of the home and other checks. The closing fees can be included in the amount loaned, however in that cases you will pay interest on them. The amount of these fees can vary significantly from lender to lender.

(more…)

Some people gladly go through the process of mortgages, but few people realize the potential danger of reverse mortgages. But first, what is a reverse mortgage? It is defined as a loan available to seniors of a country (the legal definition of “senior” differs according to where you live), that is mainly used to release home equity in a certain property as multiple payments or one lump sum.  To make the whole process run more smoothly, many borrowers opt to use reverse mortgage brokers.

Until the owner dies, leaves, or sells the house, the homeowner’s obligation to repay the loan is postponed. In its essence, a reverse mortgage is to convert the equity in your home into a cash amount. You may ask, “Why should such thing be dangerous?” The objective of this article is to enlighten you about the true risks involved in a reverse mortgage.

(more…)

Many retirees and seniors find themselves “asset rich and cash poor”. They have a great deal of equity built up in their homes or even own them outright, but are receiving a very small amount of monthly income from pensions or government plans. The concept of the reverse mortgage was created to resolve this discrepancy.

A reverse mortgage is a way to access the equity in the home without creating monthly payments. This should not be confused with a home equity loan where principal and interest payments have to be made. Essentially the cash flow runs from the bank to the home owner.

This option is attractive to seniors as it allows them access to cash while being able to keep their home and avoid a monthly loan payment. There are no restrictions on what the money can be used for. It can be paid as a lump some, monthly, or via line of credit.

Interest rates are usually adjustable-rate products, however fixed rate options are beginning to be introduced.

When insured by the federal government, they are known as a home equity conversion mortgage (HECM). These loans are guaranteed by HUD and the Federal Housing Authority. As of last year more than 300,000 seniors had participated in the program. The biggest drawback to an HECM is that there is a maximum loan amount.

One hesitation in opting for a reverse mortgage is that their will be less equity to leave as an inheritance for children. While many do not see this as a problem it is something that you might want to give consideration to.

While they have many universal benefits, a reverse mortgage is not the right solution for everybody. If you do not anticipate that you will be in the home into the foreseeable future then you may want to reconsider as the closing costs may be prohibitive.