Reverse mortgage information

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.

Reasons to refinance when rates are moving up

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Interest rates have enjoyed record lows during the last few years allowing many people to refinance and enjoy lower mortgage payments. Now, interest rates are moving in the other direction. The average 30 year fixed rate, according to mortgage giant, Freddie Mac, was 6.31% last week. Still, during this same period, refinancing accounted for 43.6% of mortgage applications.

Why would anyone refinance when rates are going up? With cash-out refinancing, you refinance your mortgage for more than you owe and keep the difference. Freddie Mac is predicting, by year end, homeowners will convert $204 billion of home equity into cash, up from $142 billion in 2004.

1. Pay off home equity credit lines. The average rate for a HELOC (Home Equity Line of Credit) rose to 6.97% last week, up from 5.09% from a year ago. Most HELOC loans have variable rates that go up when the Federal Reserve raises short term interest rates. Recently, the Federal Reserve announced its12th consecutive rate increase and they sent out a strong message they will continue the short term interest rate increase. Using a refinance to pay off a HELOC not only will lower your existing HELOC interest rate, but you can stop worrying about the Fed …for your second mortgage at least.

2. Consolidate your mortgages. Unless you put 20% or more down on your home, there is a good chance you did a combination (or piggyback second mortgage) loan to avoid PMI (Private Mortgage Insurance) which is required on loans with less than a 20% down payment. Second mortgages typically carry higher interest rates and a cash-out refinance may allow you to consolidate these loans into one lower monthly payment.

3. Secure A Fixed Rate Mortgage. Rates for adjustable mortgages, which are sensitive to Fed moves, have been rising faster than fixed rate mortgages. Borrowers with loans close to a rate adjustment are facing an increase in monthly payments and the possibility of even higher rates down the road. Many borrowers who plan to stay in their homes are fending off the higher rates and potential future increases by refinancing into fixed rate mortgages.

4. Improve Your Home. Home Equity Lines of Credit and fixed rate second mortgage rates have been rising. A cash-out refinance can prove to be a cheaper way to finance your home improvement, especially as the cost of the improvement increases. Properties refinanced during the 3rd quarter of 2005(?) saw 23% appreciation since the original loan was taken out. Improvements made after the refinance may lead to even greater increases.

While many people will no longer be interested in refinancing for a lower rate, there are many reasons to consider refinancing even as interest rates increase. If you have an existing second mortgage, need cash to consolidate credit card debt, or want to do some home improvements, refinancing your current home mortgage may be the best financial move for you. For more information regarding current rates, you can visit our website at greenwoodloans. com/.

Home mortgage loan refinance - refinancing a fixed rate mortgage

Refinancing a fixed rate mortgage is usually only suggested when interest rates fall, but you can also save money by changing your loan terms. You can also pull out part of your equity to pay bills or renovate.

Lower Interest Rates

In general when interest rates are at least 1% lower than your current mortgage rate, it pays to refinance. But you need to consider other factors, such as the length of your mortgage, loan costs, and how long you plan to stay in your home.

An adjustable rate mortgage (ARM) should also be considered if you plan to move soon. With rates lower than a fixed, you will see lower monthly payments. But you have the risk that your rates and payments will increase over time.

To help decide if refinancing makes sense for you, calculate the difference in interest payments over the course of your loan. Online mortgage calculators can help you find both total interest costs and monthly payments.

Better Loan Terms

Besides lower interest rates, you can save money by converting to a better loan term. A shorter loan, such as a 15 year term, can save you thousands on interest payments, even if you don’t have a lower interest rate. However, your monthly payments will be 10% to 15% higher.

You can also reduce your monthly payments by refinancing for a longer term. You trade lower payments for higher interest costs.

Access Your Equity

Whether you want to pay off credit cards or pay for your child’s education, you can pull out your equity by refinancing. One of the advantages of using your equity is that your interest is tax deductible.

However, if you just want to tap into your equity, a better option is a home equity loan. You can pull out your equity, write off your interest on your taxes, and avoid loan fees.

Online Lenders

Online financing companies allow you to research terms and fees from your home. You can receive quotes within minutes online, so you can compare finance packages. You can also apply online and qualify for discounts on closing cost with some lenders.

Real time mortgage leads

If you are a loan officer or mortgage broker, and you are on the market for mortgage leads, you may want to consider buying them in “real time.”

Real time leads or fresh leads are for loan officers looking for quality in a lead, as opposed to buying quantity, otherwise known as buying in bulk.

If you are buying your leads in bulk, you are undoubtedly purchasing very old leads that have been recycled from lead company to lead company several times over.

Real time leads arrive at your door step within seconds of the prospect filling out the on line form and hitting the “submit” button.

Here is how it works:

1. A potential customer goes onto a website owned and operated by the lead company.

2. The potential customer fills out the on line form specific to what they are looking for in the way of loan type, loan amount, ltv, etc.

3. The customer than hits the “submit” button.

4. The on line form, now considered a lead, comes to the lead company web site.

5. The lead finds a matching filter previously set up by a loan officer.

6. Once the lead finds a matching filter, it is than delivered by way of e-mail to the loan officer within seconds of its arrival.

If you are sick and tired of hearing “I filled out that form months ago,” or “I just closed my loan two weeks ago,” than real time leads may be the way for you to go.

But before you go spending your hard earned money, be sure to research the lead company you are considering. Call and speak with someone in customer service, find out exactly how their system works. The quicker you can get your hands on the lead, the better your chances of closing the loan.

What the bank won t tell you about your home mortgage quote

Shopping for a house is probably the most significant financial decision that you will make in your life. When you shop for your home by first attaining a home mortgage quote, your decision becomes even more momentous—you need to perform a balancing act between the house of your dreams and factors such as the down payment and interest rate payable.

Your first stop in this process will probably be your bank. This is the most obvious option, but may not always be the right one; there are things your banker will not tell you about a home mortgage quote. In other words, the home mortgage quote that is good for your banker may not be the best one for you.

Prevailing interest rates

Take the issue of interest rates. Rates fluctuate according to market exigencies. When you start your negotiations for a home mortgage quote, the interest rate might be higher than at the time you actually avail the loan. You must keep a track of such fluctuations, and induce the bank to provide you with the advantage of the prevailing rate. Your lender may not tell you this, but the difference could mean several hundred extra dollars. Therefore, it is always a good practice to consider alternative information sources before finalizing the home mortgage quote, and then compare rates on offer. With easy access to the Internet, you can even generate online quotes from web sites. This exercise will help you prepare well for negotiating with your banker regarding the interest rate.

Mortgage tenure

The mortgage tenure is another important question that you need to query. From the point of view of the bank, a 30-year fixed rate is most suitable because it can bring in returns of up to 4-5 percent for the bank. However, is it good for you? If you are looking to refinance in a period of about seven years, a 30-year rate is a disadvantage because you would be keeping the loan for only seven years.

Hidden fees and levies

Once you have finalized the purchase of the house and the interest rate with the bank, you would think that getting the right home mortgage quote is guaranteed. However, you need to watch out for those hidden fees or “add-ons”, which your banker might not have explained at the outset: loan processing fees, warranties, insurance, and the like. It always pays to put these issues on the table before finalizing the home mortgage quote.

Disproportionate service charges

In your market research for the right home mortgage quote, your focus is obviously the lowest interest rate. However, this should not be your only guide because some banks attract customers with the offer of a low rate, but may levy charges for services that are non-existent. A real-world experience is of a Fairfield, Conn., graphic designer who discovered that his bank charges fees for services such as lender inspection and notary at a rate much higher than normally acceptable. It is a prudent step to compare the complete fee package before committing to a quote. It is important to remember that lenders often offer to waive a particular fee levied by your bank in an effort to close the deal. So, it is important to recognize such opportunities and press home the advantage.

Besides raising these factors, you must also consider issues that are more closely related to your personal decision-making capacity, and for which no banker can tender advice:

• Be sure of the reasons for buying a house.

• Ensure that the size of the house is right for you.

• Choose the right time in the year to buy a house (there could be a particular time in the year when home prices drop, depending upon your location).

• If you decide to involve a real estate agent in procuring your home mortgage quote, find the right estate agent and be aware of his/her commissions.

• Select the location of the house carefully keeping in mind resale value.

• Inspect the house thoroughly, identifying problem areas and factoring them into the price.

Getting a home mortgage rate that suits your requirement is one aspect, living with it is another. However, once you have understood the operating market forces in this arena, you will go a long way toward successful management of both these aspects.

Adjustable rate mortgages vs. fixed rate mortgages

Buying a home can be an exciting and stressful time for anyone. While you may be excited at the prospect of owning your own home, especially if it is your first home purchase, the idea of choosing between all of the many different types of mortgages may leave you feeling confused and apprehensive.

Two of the most common choices you’ll find in the mortgage market are adjustable rate mortgages and fixed rate mortgages. Fixed rate mortgages are the most traditional type of home mortgage, offering a fixed interest rate that does not change throughout the life of your loan. There are a number of important advantages associated with this type of mortgage. First, if you are budget conscious, this type of mortgage will give you the peace of mind in knowing that your monthly mortgage amount will not change. You can budget the remainder of your financial obligations without worrying about a changing mortgage payment to throw things off.

An adjustable rate mortgage works differently. With this type of mortgage you may be able to obtain a lower interest rate than would normally be available with a fixed rate mortgage; however, the interest rate is not fixed. This means that your monthly mortgage rate may change as interest rates change. With such a mortgage you may not be able to regularly plan your budget due to such fluctuations. While there is usually a cap that will keep the interest rate from fluctuating too much, even a little fluctuation can be too much for some homeowners. Of course, there is also the possibility that interest rates will drop and if that is the case, because your mortgage is adjustable, your monthly payments will drop right along with the interest rate.

When deciding whether a fixed rate or adjustable rate mortgage is your best choice, you need to give thought to several factors. Ask yourself whether it is more important to be able to plan your monthly budget without wondering whether your mortgage will fluctuate or whether you would prefer to receive a lower interest rate in the beginning of your mortgage.

Remember that if you decide you would like to obtain the advantages of both you do have other options available to you. For example, if you feel the interest rate offered to you on a fixed rate mortgage is too high but you want the security of not having to worry about a fluctuating interest rate you can always buy down your interest rate by purchasing points. This will mean more up front costs for your mortgage; however, it may be worth it to decrease the interest rate, especially if interest rates are currently high.

If you do elect to go with an adjustable rate mortgage make sure you understand exactly how high the rates may go as well as ensure you have enough ‘wiggle’ room in your monthly budget to cushion increases if they occur. This may help to keep you out of a tight spot and possibly losing your home due to rising interest rates.