Reverse mortgages was created with the intention of giving retired senior citizens, age sixty two or older a steady income, this income is derived from the equity that's in the home. The senior citizen must also live in the home.
The mortgage lender isn't reimbursed until the property is sold. One caution about reverse mortgages is that the APR is usually more than that of a traditional home loan. There are three types of reverse mortgages.
The first type of reverse mortgage is Single Purpose Reverse Mortgage. The single purpose reverse mortgage is normally given to those with low to moderate incomes usually by the government. The aim of this type of mortgage is to help the homeowner pay for things involving the home and property, such as taxes, improvements, and/or repairs.
The second kind of reverse mortgage is the Home Equity Conversion Mortgages (HECM) also known as federally insured reverse mortgages. This home loan is backed by The department of Housing and Urban Development (HUD). This kind of home loan costs more than the Single Purpose loan, but doesn't require single purpose use. HECM loans require that you contact a counselor to discuss costs, risks, and possible choices including choosing one of the other two types of loans.
The third kind of reverse mortgage is proprietary. The companies that have originated them insure these loans. They are very similar to the HECM reverse mortgages in that they are pricier than the Single Purpose loans and follow the same guidelines in determining who will qualify for one and how much it will cost. Proprietary reverse mortgages differs from HECM loans because they don't require you to meet with a counselor before applying for one.
However both reverse mortgages determine the amount you can borrow from assessing factors such as age, home value, location, and interest rates. To determine which reverse mortgage fits your situation, you should get in touch with a loan officer that's knowledgeable of reverse mortgages or a HECM counselor.
Monday, October 20, 2008
Sunday, October 12, 2008
Selecting The Right Mortgage Lender
Shopping around for mortgage lenders is just as crucial as picking out for the right home. You want to choose a lender who's working for your best interest and goals. There's many lenders that are available and many various types of loans. So what's the best for you?
First you'll need to figure out your goals, situation, options and preferences. Are you a first time homeowner? If so, you want to seek out lenders who offer FHA mortgage loans and who are prepared to work with you step by step to help you with understanding the home buying process.
It might be better to find a local lender with a physical location to better accommodate your needs and questions by meeting you in person and discussing all of your questions and explain the application process step by step as you fill out the paperwork.
Online home loan lenders often have more competitive rates and can be a better option for borrowers that are familiar or are comfortable with financing a mortgage loan with a mortgage lender that doesn't have a physical location.
Online lenders are great sources for equity home loans with low interest rates. Online home loan lenders are commonly a little quicker because everything is at the touch of key instead of pushing paper through a process.
Mortgage brokers are a great source for connecting borrowers to the right lenders. They can help you find a lender even if you have poor credit or other rare circumstances.
Mortgage brokers works off of commission and therefore are more likely to make the near impossible possible. The important thing is to find a mortgage lender that offers the kind of loan you want such as FHA and VA home loans, as well as offering the best interest rate for a person in your situation, but you have to be reasonable.
If your credit is bad, you cannot expect to get the same interest rate as someone with perfect credit. But some mortgage lenders are willing to lend money to risky investments and some aren't. So shop around and find out what home loan lenders are willing to offer.
First you'll need to figure out your goals, situation, options and preferences. Are you a first time homeowner? If so, you want to seek out lenders who offer FHA mortgage loans and who are prepared to work with you step by step to help you with understanding the home buying process.
It might be better to find a local lender with a physical location to better accommodate your needs and questions by meeting you in person and discussing all of your questions and explain the application process step by step as you fill out the paperwork.
Online home loan lenders often have more competitive rates and can be a better option for borrowers that are familiar or are comfortable with financing a mortgage loan with a mortgage lender that doesn't have a physical location.
Online lenders are great sources for equity home loans with low interest rates. Online home loan lenders are commonly a little quicker because everything is at the touch of key instead of pushing paper through a process.
Mortgage brokers are a great source for connecting borrowers to the right lenders. They can help you find a lender even if you have poor credit or other rare circumstances.
Mortgage brokers works off of commission and therefore are more likely to make the near impossible possible. The important thing is to find a mortgage lender that offers the kind of loan you want such as FHA and VA home loans, as well as offering the best interest rate for a person in your situation, but you have to be reasonable.
If your credit is bad, you cannot expect to get the same interest rate as someone with perfect credit. But some mortgage lenders are willing to lend money to risky investments and some aren't. So shop around and find out what home loan lenders are willing to offer.
Tuesday, October 7, 2008
Thinking About a Mortgage Refinance?
There's a number of reasons regarding refinancing your mortgage. The current interest rates may be less to switch from a adjustable rate to a fixed rate, to avoid paying a balloon payment, to eliminate private mortgage insurance or to retain cash from the homes equity. In any circumstance there's a few steps you want to follow when in the process of refinancing your home loan.
Also things you'll require for the refinancing process are W-2s, tax returns, bank statements, credit card, brokerage account statements, proof of home owners insurance and title and purchase agreement, along with other documents that might be requested.
First you should take into consideration how long you plan to reside in the home in question. If you don't plan on staying in the home for more than 3 years you should consider financing the mortgage. It commonly takes about this amount of time to have any financial gains from refinancing.
Also you want to be certain that you'll save at least one percent on your new APR to benefit from refinancing. Don't forget to add the fees and costs that's associated with refinancing the loan to make sure that you're benefiting from the refinance.
Second you should try refinancing through your current lender to possibly save on the closing costs. Plus the lender already has a file on the property and can expedite the refinancing much quicker than finding a new lender. Also, make sure to lock your interest rate from the beginning of your application process so you are not affected if rates increase during that time.
The last thing you should take into consideration when refinancing your home loan is the term you want to refinance for. It is normally recommended to refinance for the remaining months that you currently have left on the mortgage. Although extending the mortgage term while refinancing can decrease monthly payments, it might cost you more in the long run by extending the period in which you are paying on the loan.
Also things you'll require for the refinancing process are W-2s, tax returns, bank statements, credit card, brokerage account statements, proof of home owners insurance and title and purchase agreement, along with other documents that might be requested.
First you should take into consideration how long you plan to reside in the home in question. If you don't plan on staying in the home for more than 3 years you should consider financing the mortgage. It commonly takes about this amount of time to have any financial gains from refinancing.
Also you want to be certain that you'll save at least one percent on your new APR to benefit from refinancing. Don't forget to add the fees and costs that's associated with refinancing the loan to make sure that you're benefiting from the refinance.
Second you should try refinancing through your current lender to possibly save on the closing costs. Plus the lender already has a file on the property and can expedite the refinancing much quicker than finding a new lender. Also, make sure to lock your interest rate from the beginning of your application process so you are not affected if rates increase during that time.
The last thing you should take into consideration when refinancing your home loan is the term you want to refinance for. It is normally recommended to refinance for the remaining months that you currently have left on the mortgage. Although extending the mortgage term while refinancing can decrease monthly payments, it might cost you more in the long run by extending the period in which you are paying on the loan.
Friday, October 3, 2008
The Bi-Weekly Mortgage Program
The Bi-Weekly Mortgage Program is an accelerated home loan program that will enable a thirty year home loan to be liquidated in as little as 23 years.
The program is normally set by the mortgage lender or a third party agency in which an electronic funds transfer is made from the borrowers banking account every two weeks in the amount of half of the monthly mortgage payment amount that's due.
In more simple terms, the borrower makes payment for thirteen months instead of twelve.
The Bi-Weekly Mortgage Program is set up so that the extra principle payments that it collects are accumulated in the escrow account and applied to the principle at the years end. It is not certain who benefits from the interest that is accrued on these monies while they are sitting in the escrow account.
This program is an excellent choice for someone who wants to pay off his/her mortgage earlier than thirty years but does not want to be hassled by attempting to manage a self implemented accelerated program. Basically, the payments are automatically withdrawn every couple of weeks so there's no late payments and confusion to the borrower.
You may also want to consider trying to execute a bi-weekly mortgage loan program on your own. This is where the borrower implements the above plan without formally doing so through the lender or third party agency. Just be sure that the additional money is taken off of the principal.
This is more flexible because you can adjust the additional amount every month depending on your finances for that month. It's also beneficial because you avoid the extra fees associated with bi-weekly mortgage programs.
On the other hand, the bi-weekly mortgage program through a lender or agency might be more effective in the long run because you aren't able to be tempted not to pay the extra payments because they are automatically deducted.
The program is normally set by the mortgage lender or a third party agency in which an electronic funds transfer is made from the borrowers banking account every two weeks in the amount of half of the monthly mortgage payment amount that's due.
In more simple terms, the borrower makes payment for thirteen months instead of twelve.
The Bi-Weekly Mortgage Program is set up so that the extra principle payments that it collects are accumulated in the escrow account and applied to the principle at the years end. It is not certain who benefits from the interest that is accrued on these monies while they are sitting in the escrow account.
This program is an excellent choice for someone who wants to pay off his/her mortgage earlier than thirty years but does not want to be hassled by attempting to manage a self implemented accelerated program. Basically, the payments are automatically withdrawn every couple of weeks so there's no late payments and confusion to the borrower.
You may also want to consider trying to execute a bi-weekly mortgage loan program on your own. This is where the borrower implements the above plan without formally doing so through the lender or third party agency. Just be sure that the additional money is taken off of the principal.
This is more flexible because you can adjust the additional amount every month depending on your finances for that month. It's also beneficial because you avoid the extra fees associated with bi-weekly mortgage programs.
On the other hand, the bi-weekly mortgage program through a lender or agency might be more effective in the long run because you aren't able to be tempted not to pay the extra payments because they are automatically deducted.
Tuesday, September 30, 2008
The Mortgage Downpayment
It's the one question that pops in our minds whenever we think about purchasing a home. Where are we going to come up with the down payment? Many people don't have twenty percent for the down payment sitting in their bank accounts.
Those who do are probably already sitting pretty in a nice home. So where does the average Joe come up with a down payment and why it's so important. Well the down payment is important because it indicates to a lender you're serious about the home loan you're about to make.
The more the down payment, the better your interest rate will be. The borrower is much more likely to pay the monthly mortgage on a home that he has invested thousands dollars in. A down payment is viewed as the borrowers insurance that the loan will be repaid.
The fact that this decreases the chances of the borrower defaulting on the monthly mortgage payments, makes the loan less dangerous and banks therefore reward the borrower with a lower interest rate. Down payments also reduces the amount of the loan.
Because interest will accrue on less principle, the borrower can substantially reduce the monthly mortgage and total interest paid with the larger down payment.
This is all great, but where do we get the money for the down payment? Some ideas would be to set up a monthly electronic draft to where the money are automatically drafted from your checking account into your savings account. That way you'll budget for it and it won't be tempted to use the funds towards something else.
Another idea is to save money from tax returns, bonuses and other extra sources of income to help to finance a down payment. Also, some investments will allow investors to dip into their investment accounts to help finance the buying of a home with little or no penalties.
There are no quick solutions. Preparing to purchase a home takes planning and preparation. These ideas are just a few of the ways to effectively save for a down payment.
Those who do are probably already sitting pretty in a nice home. So where does the average Joe come up with a down payment and why it's so important. Well the down payment is important because it indicates to a lender you're serious about the home loan you're about to make.
The more the down payment, the better your interest rate will be. The borrower is much more likely to pay the monthly mortgage on a home that he has invested thousands dollars in. A down payment is viewed as the borrowers insurance that the loan will be repaid.
The fact that this decreases the chances of the borrower defaulting on the monthly mortgage payments, makes the loan less dangerous and banks therefore reward the borrower with a lower interest rate. Down payments also reduces the amount of the loan.
Because interest will accrue on less principle, the borrower can substantially reduce the monthly mortgage and total interest paid with the larger down payment.
This is all great, but where do we get the money for the down payment? Some ideas would be to set up a monthly electronic draft to where the money are automatically drafted from your checking account into your savings account. That way you'll budget for it and it won't be tempted to use the funds towards something else.
Another idea is to save money from tax returns, bonuses and other extra sources of income to help to finance a down payment. Also, some investments will allow investors to dip into their investment accounts to help finance the buying of a home with little or no penalties.
There are no quick solutions. Preparing to purchase a home takes planning and preparation. These ideas are just a few of the ways to effectively save for a down payment.
Thursday, September 25, 2008
Jumbo Mortgages?
Ever wondered how some people buy those 1,000,000 dollar homes? Although many people put down substantial down payments, several finance a home loan just like the rest of us. These highly priced mortgages are known as Jumbo and Super Jumbo Mortgages.
Jumbo mortgages are loans that surpass $417,000 as of 2006. Super Jumbo loans are mortgage loans that are typically $750,000 or more. These limits are adjusted yearly to reflect the ongoing market changes.
Jumbo mortgages are also known as non-conforming loans because they don't stick with with FHA underwriting loan limits that are set annually. Fannie Mae and Freddie Mac agencies buy the majority of mortgage securities from the original loan lenders.
They have a upper limit on the maximum dollar value ofevery mortgage they will buy that is in accordance of the FHA underwriting mortgage limits. In 2006 it was increased to $417,000. Insurance companies and large banks commonly help finance the excessive mortgages like Jumbo and Super Jumbo mortgages that can go up to six million dollars.
Jumbo and Super Jumbo mortgages usually have somewhat higher interest rates than that of a conforming mortgage loan. Interest rates on these non-conforming loans also vary according to the home value and property classification.
If you are curious about a Jumbo mortgage or Super Jumbo mortgage loan you can go to jumboloans.com and fill out a form. Afterwards up to four lenders will reply with their best offer. This form doesn't require your social security number. It's also not an application for credit, but connects you to the top home loan specialists that serve your area.
Afterwards you can try contacting one or all of these mortgage lenders to receive more information about the loan process, requirements, and interest rates estimate for the home you potentially want to purchase.
Jumbo mortgages are loans that surpass $417,000 as of 2006. Super Jumbo loans are mortgage loans that are typically $750,000 or more. These limits are adjusted yearly to reflect the ongoing market changes.
Jumbo mortgages are also known as non-conforming loans because they don't stick with with FHA underwriting loan limits that are set annually. Fannie Mae and Freddie Mac agencies buy the majority of mortgage securities from the original loan lenders.
They have a upper limit on the maximum dollar value ofevery mortgage they will buy that is in accordance of the FHA underwriting mortgage limits. In 2006 it was increased to $417,000. Insurance companies and large banks commonly help finance the excessive mortgages like Jumbo and Super Jumbo mortgages that can go up to six million dollars.
Jumbo and Super Jumbo mortgages usually have somewhat higher interest rates than that of a conforming mortgage loan. Interest rates on these non-conforming loans also vary according to the home value and property classification.
If you are curious about a Jumbo mortgage or Super Jumbo mortgage loan you can go to jumboloans.com and fill out a form. Afterwards up to four lenders will reply with their best offer. This form doesn't require your social security number. It's also not an application for credit, but connects you to the top home loan specialists that serve your area.
Afterwards you can try contacting one or all of these mortgage lenders to receive more information about the loan process, requirements, and interest rates estimate for the home you potentially want to purchase.
Tuesday, September 23, 2008
Is The 80-20 Mortgage Loan Right For You?
Many potential home buyers don't have the down payment for homes. They are stuck paying a monthly rent and can't save efficiently for a down payment. There are loans out there to accommodate those people who can't make a down payment.
The 80 20 loan is a home loan that requires two mortgages. One of the mortgages is for eighty percent of the loan amount and the other is for 20% of the loan. The 20% loan is also referred to as a piggyback loan.
It's interest rate is normally a little higher than the 80% loan amount. You can even opt for the interest only on the 20% loan to lower the monthly payment.
The 80-20 home loan also exempts the borrower from having to pay the private mortgage insurance or PMI. PMI is necessary for any loan that is over 80% of the appraised value of the home. The 80% mortgage and 20% mortgage added together is still usually less expensive than a single home loan with PMI insurance. Also home loan interest can be written off on taxes, but not PMI insurance, so the borrower would also benefit there. Mortgage companies and lenders set up these loans several different ways.
Because the 20% loan is viewed as an equity line of credit it should be refinanced every 3-5 years. You'll need to compare lenders to learn of the various other techniques that are used to help finance the two mortgages and which works best for you.
80-20 loans can help many potential home owners. While it is usually popular with those people who don't have enough savings for a down payment, it can benefit those individuals who do have the funds, but don't want to dip into their savings or investments. The only payment that's due up front by the borrower is the closing costs.
The 80 20 loan is a home loan that requires two mortgages. One of the mortgages is for eighty percent of the loan amount and the other is for 20% of the loan. The 20% loan is also referred to as a piggyback loan.
It's interest rate is normally a little higher than the 80% loan amount. You can even opt for the interest only on the 20% loan to lower the monthly payment.
The 80-20 home loan also exempts the borrower from having to pay the private mortgage insurance or PMI. PMI is necessary for any loan that is over 80% of the appraised value of the home. The 80% mortgage and 20% mortgage added together is still usually less expensive than a single home loan with PMI insurance. Also home loan interest can be written off on taxes, but not PMI insurance, so the borrower would also benefit there. Mortgage companies and lenders set up these loans several different ways.
Because the 20% loan is viewed as an equity line of credit it should be refinanced every 3-5 years. You'll need to compare lenders to learn of the various other techniques that are used to help finance the two mortgages and which works best for you.
80-20 loans can help many potential home owners. While it is usually popular with those people who don't have enough savings for a down payment, it can benefit those individuals who do have the funds, but don't want to dip into their savings or investments. The only payment that's due up front by the borrower is the closing costs.
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