home loans – mortgage refinance second mortage

anonymous asked:


Consider a reverse mortgage when you have a large amount of equity in your home. You don’t make monthly mortgage payments but instead, your bank pays you, the homeowner, a monthly income! While you benefit from the extra income, the bank benefits by owning the home when you die. This sort of program works very well for senior citizens who need the extra income. What if you have no mortgage loan or if you’ve paid off your mortgage loans? Then your bank can easily create a loan for up to forty per cent of your home’s value and start sending you checks each month.

How Reverse Mortgage Loans Are Useful

In many instances, these loans are better than selling the home to raise the money. The money can be used as an additional income, for medical expenses, or you could just go on a cruise. Reverse mortgage loans are ideal for home improvement expenses, paying off current mortgage loans, etc. You can even turn the equity in your home to cash without selling your home.

The best part is, unlike regular mortgage loans where the lender collects monthly repayments from you, in reverse mortgage loans, it is the lender who gives you a monthly payment, without you having to pay it back as long as you occupy your home. The loan only has to be settled when you die, or move out, or sell your home. Suppose you need urgent cash, you can use your home equity to get it through a reverse mortgage. You do not have to pay tax on your reverse mortgage loan advance. The title to your home remains with you.

Kinds Of Reverse Mortgage Loans:

Single-Purpose reverse mortgage loans which are associated with low costs, given for specific purposes like home repairs, property taxes etc. You would qualify for this only if your income is very low or moderate.

Federally-insured home equity conversion reverse mortgage loans which offer you the choice of how you would like to receive the loan; this could be fixed monthly cash advances or a line of credit or a combination of the two, as long as you occupy your home.

Private reverse mortgage loans.

Usually, the home equity conversion reverse and private loans are more expensive with higher initial costs. They are not economical if you occupy your home for a short period.

Facts You Must Know About Reverse Mortgage Loans

You need to be aware that the lenders charge upfront fees and closing costs in the loan, along with other servicing costs. As with any loan, the amount you owe increases over a period of time and the interest payable is calculated on your outstanding balance and included in your monthly dues leading to an increase in your debt.

The interest rates could be fixed or variable and prone to fluctuation. You could lose the equity on your home. Being the owner of the title to your home, you are the one who will pay property taxes, utility bills, maintenance and other property-related expenses.

Whatever type of reverse mortgage loans you are planning, understand the costs involved and consider all the options available that might cost you less.



CLAYTON