Posts tagged with 'Lump Sum'

Understanding Reverse Mortgages

  • Posted on January 3, 2011 at 9:17 am

Can’t remember how many times I’ve been asked “What is a reverse mortgage”? Reverse mortgages are a great way to get a loan using your primary asset. The flexibility, of course, comes at a price. A reverse mortgage is a loan using your property and is referred to as a “rising debt, falling equity” deal.

To compare reverse mortgage to a traditional one, the type of mortgage commonly used when buying a house is classified as a “forward mortgage”. To qualify for forward mortgage, you must have a steady source of income. Because the mortgage is secured by the asset, if you default on the payments, your can loose your home. Your equity is the difference between the balance mortgage amount and how much you’ve paid.You own the house when you make your final mortgage payment.

The reverse mortgage process doesn’t require that the applicant have great credit, or even to have a steady source of income. The major stipulation is that the house is owned by the applicant and a minimum age is required as well, the older the applicant, the higher the loan amount. Another less known requirement is that the reverse mortgage must be the sole debt against your house.

In a reverse mortgage your debt increases along with your equity. Instead of making any monthly payments, the amount loaned has interest added to it – which swallows up your equity bit by bit. If the loan is over a long period of time, when the mortgage comes due, there may be a large amount owed. On the other hand, if it was to increase, this could allow for an equity gain, but this isn’t typical of the marketplace.

There are a few options in withdrawing the money form the loan. It can be a single lump sum, regular monthly advances, or a credit account. There are conditions in this kind of mortgage that would warrant the immediate repayment of the loan; the mortgage will be due when the borrower dies, sells the house, or moves out.

Failure to pay your property taxes or insurance on the home will undoubtedly lead to a default as well. The lender can pay for these obligations to reduce your advances in order to cover the expenses. Be sure you read the loan documents carefully and in detail and also make a point to understand all the conditions that can cause your loan to become due.

Types Of Reverse Mortgage Options

  • Posted on December 27, 2010 at 9:17 am

There are many different reverse mortgage options: single purpose reverse mortgages, federally insured reverse mortgages, and proprietary (private sector) reverse mortgages. Every option has its fair share of pros and cons that need to be considered.

Single-Purpose Reverse Mortgages

A single purpose reverse mortgage is the lowest-cost type of reverse mortgages to obtain, but as the name indicates it can only be used for one specified purpose. These type of mortgages are expedited by state or local government agencies. These loans a great for individuals who need cash for a purposes like paying property taxes or fixing up their own residence. Here are descriptions for several different types of single purpose reverse mortgages:

Property tax deferral (PTD) mortgages are reverse mortgages that provide loan advances for paying property taxes.

Deferred payment loans (DPLs) home improvement reverse mortgages provided in a lump sum disbursement method.

Federally Insured Reverse Mortgages

This type of reverse mortgage is only iinsured by the Federal Housing Administration (FHA). These reverse mortgage are perhaps one of the cheaper multi-purpose reverse mortgages currently available. Overall they typically provide the largest total cash benefits of all the reverse mortgage options.These loans are also known as HECM or Home Equity Conversion Mortgages.

Proprietary Reverse Mortgages

A proprietary reverse mortgage is a mortgage product owned by a private company. These type of loans are more costlier then the other reverse mortgage types and you are advised to approach with caution. Those interested in these type loans should get a comparison with a similiar HECM. The benefit of proprietary reverse mortgages are of its ability to offer higher home value within its limitation.

the higher home value limits. So, if you live in a home that is worth a lot more than the average home value in your county, a proprietary loan may give you greater loan advances than a Home Equity Conversion Mortgage (HECM).

Just like any other financial decision, you should get professional help to decide which option is best for your current situation. Reverse mortgage counselors can help you evaluate each of your options and help you make an informed decision.

Reverse Mortgages For Seniors

  • Posted on November 8, 2010 at 9:17 am

Reverse mortgage has become popular in America these days, these are special type of mortgage that helps an homeowner to convert his home equity into cash, this boost up the American older financial security by helping them to meet unexpected medical expenses, home improvement and many more.

The homeowners should be 62 years and older who has already settled any mortgage they have already got it or has remaining small amount of mortgage balance are the eligible people to take up this Reverse mortgage by HUDs.

Homeowners would be able to receive the payment in a lump sum or can receive on monthly basis for a fixed period of time or as long as they live in the house, this mortgage can be changed according to the circumstances of the homeowners, unlike other mortgages the HUDs reverse mortgage for seniors do not require repayments from the borrowers as long as they live in that home, the lender will recover the principal amount along with the interest at the time of the house being sold out, and the balance amount will be paid to the house owner or her or his survivors, incase the amount received by selling the house is not sufficient to pay the amount that has been borrowed , HUD will take up the responsibility to pay the shortage amount to the lender. The Federal Housing Administrations that is a part of HUD is responsible to collect the insurance premium from the borrowers for providing the coverage.

The amount of reverse mortgage for seniors will be decided based on the age, interest rate and the value of the house of the borrower, in this type of mortgage the older the borrower the greater the amount that is lent. For instance based on todays rate of interest 9% approximately a 65 yrs old person can borrow 26% of the value of his home and 75 yrs old person could get 39% of the value of the home and 85 yrs old man get 56% of the value of the home.

To get this reverse mortgage from the HUD you need not present any income proof or show any kind of asset, and there is also no limitation for the value of the homes that is being qualified under HUDs reverse mortgage. The home owners are charged 2% of the value of the home as up front fees plus one half percent of the balance loan amount every year and this amount can be usually paid by the lender and further charged in the principal amount borrowed by the home owner.

Reverse Mortgages Can Benefit Elderly

  • Posted on October 25, 2010 at 9:17 am

Reverse mortgages are available through lenders insured by the federal government and can be of great benefit to those who are eligible to apply. There are three types of reverse mortgages currently available in the United States, including Home Equity Conversion Mortgages (HECM), Fannie Mae (FNMA) Home Keeper and Financial Freedom Cash Accounts. The basic premise of a reverse mortgage is that it allows homeowners over the age of sixty-two to convert part of the equity in their homes into tax-free income without having to sell the home, give up the title to the home, or take on a new monthly mortgage payment. The reverse mortgage is titled as such because lenders pay the borrower fixed payments or a lump sum over time as opposed to a traditional mortgage arrangement. Eligible property includes single-family dwellings, manufactured homes built after June 1976, condominiums and town houses.

The process for applying for a reverse mortgage is more involved than with a traditional mortgage. Aside from meeting the age and property type restrictions, applicants must discuss the loan with a counselor employed by the U.S. Department of Housing and Urban Development prior to signing. There are five different types of payment methods for each United States government insured loan available, allowing for flexibility to meet the needs of the applicants. These include monthly, quarterly, semi-annual and annual payments to the borrower for a fixed number of periods or a lump sum that can be invested.

Repayment terms also vary by the interest rate, as with traditional mortgages. Those who choose variable rate mortgages will pay over one percent less since the risk assumed by the borrower for agreeing to monthly adjustable rate calculations can greatly increase their risk over the life of the mortgage. The total of the mortgage is due when the house is no longer occupied by the borrower and can be paid by the borrower or by his or her heirs in the event of death.

While many consider borrowing to be a bad idea later in life, reverse mortgages simply allow seniors to enjoy the equity they have already established without carrying the risk of having to meet monthly payments while on a reduced or fixed income. This can substantially increase the quality of life for many older Americans and allow them to enjoy the fruits of their life long labor.

Reverse Mortgages Funding Retirement

  • Posted on October 11, 2010 at 9:17 am

With people living longer and longer, funding retirement can become a stressful situation. Reverse mortgages can help home owners avoid worries about cash flow.

Reverse Mortgages

Reverse mortgages are essentially a method for turning the equity in your home into cash. Although there are various options, a typical reverse mortgage will provide you with a lump sum, monthly payments or a credit line based on the equity in your home. The mortgage will have a term of a certain number of years. Instead of making payments on the loan, the bank will become the owner of the percentage of your equity applied for the loan at the end of the term.

Reverse mortgages are only available to older applicants. Every person listed on the deed of the home must be 62 years of age or older. You must also use the home as your primary residence.

The decision to pursue a reverse mortgage can be a tricky one. The biggest issue is an emotional one. We are all mentally trained to buy a home and try to build equity over the years. With a reverse mortgage, we are making the mental leap to actually reduce the equity in our homes. While this may sound like a sensible method for using the nest egg equity, it makes you, me and everyone very nervous.

For some seniors, the reverse mortgage decision makes sense while it doesnt for others. To limit the potential for problems and scams, banks are required to have senior applicants meet with unbiased third parties to determine the benefits and downside of using reverse mortgages.

If you or your parents have reached retirement age and are facing cash flow problems, you need to become flexible in dealing with finances. Reverse mortgages may be one flexible option that makes sense for your particular situation. After all, you cant take the equity in a home with you.

Reverse Mortgage Information

  • Posted on September 13, 2010 at 9:17 am

The first question that needs to be answered is “what is a reverse mortgage?” A reverse mortgage is a specific type of loan used by older homeowners who have built up some equity in their home. It is a method of acquiring cash from their home, manufactured home, town home or condominium. By using this type of borrowing method senior citizens can come up with money that they can use any way they want without the need to pay it back during their lifetime. If these elderly Americans can qualify they can turn their home equity into money.

If older American homeowners are struggling with their finances they can apply for this type of loan which can be used to pay off debts, increase their monthly income or for other things. This monetary influx will allow these senior citizens an opportunity to get out from under their current debt or to increase their monthly income which can be used for their daily expenses. They can start enjoying their life to the fullest by coming up with the additional cash they need. The money can be used to get out of financial trouble, home improvements, traveling and for other expenditures. This extra cash may be used for luxuries they have always wanted, but could never afford.

The purpose of a reverse mortgage is to allow senior citizens the opportunity to receive the extra cash they require without the necessity of having to sell their house. The cash they get can provide them with the additional financial security they require and also give them a chance at enjoying their remaining years by reducing their money worries. There are several ways to receive this money including regular monthly payments, a lump sum or even as a credit line. A line of credit is the most common method people use to receive money from a reverse mortgage. Some retired persons get their money by using a combination of these methods. It’s possible to receive monthly payments while also getting a big chunk of money up front too.

The term reverse mortgage is a simple way of “reversing” a mortgage. Rather than being forced to make monthly payments by taking out a home loan people can actually receive monthly payments themselves. It’s a method for retired homeowners to increase their comfort of living by taking advantage of the equity they have built up in their home. The loan amount depends on many factors including the value of their residence, how old they are, how much equity is in the home along with other factors.

To qualify for a reverse mortgage the applicant must be 62 years of age or older. They must also own a home (single family residence), manufactured home built on or after June 1976, town home or condominium. And of course they must have a certain amount of home equity. It is not necessary to have the house paid off completely, but there must be equity in it. In other words you can still qualify for a reverse mortgage even if you have an outstanding mortgage loan.

The loan cannot exceed the home’s value, but there are no monthly income requirements and no medical prerequisites for qualification. There are few requirements, one of which is that the applicant must first meet with an approved counselor to discuss the loan or other possible options for their situation. Other than that there are very few requirements.

Reverse Mortgage Benefits To Seniors

  • Posted on July 5, 2010 at 9:17 am

Reverse mortgages are available through lenders insured by the federal government and can be of great benefit to those who are eligible to apply. There are three types of reverse mortgages currently available in the United States, including Home Equity Conversion Mortgages (HECM), Fannie Mae (FNMA) Home Keeper and Financial Freedom Cash Accounts. The basic premise of a reverse mortgage is that it allows homeowners over the age of sixty-two to convert part of the equity in their homes into tax-free income without having to sell the home, give up the title to the home, or take on a new monthly mortgage payment. The reverse mortgage is titled as such because lenders pay the borrower fixed payments or a lump sum over time as opposed to a traditional mortgage arrangement. Properties that are eligible include single-family dwellings, manufactured homes built after June 1976, town houses and condominiums.

The process for applying for a reverse mortgage is more involved than with a traditional mortgage. Aside from meeting the age and property type restrictions, applicants must discuss the loan with a counselor employed by the U.S. Department of Housing and Urban Development before the signing of the terms agreement. There are 5 different types of payment methods for each fed government insured loans, allowing for flexibility to meet the needs of the applicants. These include monthly, quarterly, semi-annual and annual payments to the borrower for a fixed number of periods or a lump sum that can be invested.

Like traditional mortgage, the interest rates can vary accordingly. Those who choose variable rate mortgages will pay over one percent less since the risk assumed by the borrower for agreeing to monthly adjustable rate calculations can greatly increase their risk over the life of the mortgage. The mortgage is due when the house is no longer occupied by the borrower and will be paid by the borrower or heirs in the event of death.

While many consider borrowing to be a bad idea later in life, reverse mortgages simply allow seniors to enjoy the equity they have already established without carrying the risk of having to meet monthly payments while on a reduced or fixed income. This can substantially increase the quality of life for many older Americans and allow them to enjoy the fruits of their life long labor.

Reverse Mortgage A Seniors Financial Tool

  • Posted on June 28, 2010 at 9:17 am

Reverse mortgage is a financial tool for retiree homeowners living in their twilight years to carry on with life without having to worry about their daily expenses. But some prefer to see this as an opportunity to maximize a dream lifestyle of their choice. It is a method of acquiring cash from their home equity.

By using this type of borrowing method senior citizens can come up with money that they can use any way they want without the need to pay it back during their lifetime. If these elderly Americans can qualify they can turn their home equity into money.

The purpose of a reverse mortgage is to allow senior citizens the opportunity to receive the extra cash they require without the necessity of having to sell their house. The cash they get can provide them with the additional financial security they require and also give them a chance at enjoying their remaining years by reducing their money worries. There are several ways to receive this money including regular monthly payments, a lump sum or even as a credit line. A line of credit is the most common method people use to receive money from a reverse mortgage. Some retired persons get their money by using a combination of these methods. It’s possible to receive monthly payments while also getting a big chunk of money up front too.

The term reverse mortgage is a simple way of “reversing” a mortgage. Rather than being forced to make monthly payments by taking out a home loan people can actually receive monthly payments themselves. It’s a method for retired homeowners to increase their comfort of living by taking advantage of the equity they have built up in their home. The loan amount depends on many factors including the value of their residence, how old they are, how much equity is in the home along with other factors.

To qualify for a reverse mortgage the applicant must be 62 years of age or older. They must also own a home (single family residence), manufactured home built on or after June 1976, town home or condominium. And of course they must have a certain amount of home equity. It is not necessary to have the house paid off completely, but there must be equity in it. In other words you can still qualify for a reverse mortgage even if you have an outstanding mortgage loan.

The loan cannot exceed the home’s value, but there are no monthly income requirements and no medical prerequisites for qualification. There are few requirements, one of which is that the applicant must first meet with an approved counselor to discuss the loan or other possible options for their situation. Other than that there are very few requirements.

There are no monthly income requirements and no medical prerequisites for qualifications but with one condition that the loan cannot exceed the value of the property. Before approval of any reverse mortgage loans, it is required that the applicant must first meet with an approved counselor to discuss other possible options before taking up a reverse mortgage. Other than that there are very few requirements for its eligibility.

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