Walter GormanSenior Loan Officer NMLS#: 138370
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A reverse mortgage, officially labeled as a Home Equity Conversion Mortgage, or an FHA HECM, is a bit counterintuitive at first glance. Contrary to a standard or “forward” mortgage, a reverse mortgage pays the homeowners instead. It has shown to be an excellent option for homeowners who may be “house rich,” but perhaps, “cash poor,” or for those who would like to supplement their income in their retirement years. There are also no monthly payments required with a reverse mortgage.
Here are some of the more common questions asked about a reverse mortgage.
How much can I qualify for? That’s a moving target because the amount of available funds is based upon different factors such as the current appraised value of the property and the age of the youngest borrower occupying the property. A loan-to-value of 60% is common.
Does the lender take ownership of the property? No, title remains in your name with a reverse mortgage. The main difference with a reverse mortgage is that interest is accrued and no payments are made while living in the property. Ownership does not change.
When do I pay off the reverse mortgage? The reverse mortgage is paid off when the last borrower on the application no longer occupies the property.
What about my mortgage that I have now? With a reverse mortgage, proceeds from the new loan will go toward paying any ...
When thinking of retiring and using real estate to help aid that retirement, many people believe their options are to pay off their house, or to even borrow against their home equity if they need money. However, an even better option is to invest in real estate in order to build your retirement income.
If you purchase an investment property now, you can use the rental income to help pay the mortgage. Depending on how old you currently are, and what mortgage term you choose, it’s best to select one that would help you to pay the loan in full by the time you want to retire. If the mortgage is paid in full, you then have the choice of keeping the property and continuing to receive the net rental income, or you can sell your mortgage-free property and keep the earnings.
Rather than try risky investments, or even house flipping, a rental income retirement strategy allows you a steady and secure income. You’re generating cash flow every month with the rent your tenants pay, and often your return on investment for rental income is in the 5-10% range, depending on the investment.
There are also many other advantages for investing in real estate and using it towards your retirement income. When investing, it’s always smarter and safer to have a diverse portfolio. Instead of just relying on stocks, real estate is a great alternative source of income. Appreciation is also key in real estate investing, as long-term rental properties tend to appreciate over time. Also, if you plan on ...
VA mortgage loans have always been a great option for veterans or current active military members, but surviving spouses who have lost a military-employed husband or wife also have the potential to qualify for benefits as well.
Some of those benefits include no down payment, better terms and interest rates, 100% financing, and more. So, how does a surviving spouse of a veteran or military member see if they qualify for a VA mortgage loan? The widow or widower would be eligible if they have not remarried and:
- Survived a spouse who died in service or due to a service-related injury. Survived a spouse that was MIA (missing in action) or a POW (prisoner of war) for at least 90 days (limited to one-time use of benefit).
- Had a spouse that served in the U.S. Army, Navy, National Guard, Coast Guard, Marine Corps., or Air Force. Reservists who served at least 6 years are also eligible.
- Survived a spouse who was eligible for disability compensation at the time of death and was rated continuously totally disabled for the specified period of time (10 years prior to their death or 5 years from the date of their discharge). If your spouse was a POW, they would need to have been rated totally disabled for at least one year prior to their death.
Surviving spouses may also qualify for a VA mortgage loan refinance, which would allow you to change your loan term, lower your monthly payment, or possibly obtain lower interest rates if they’re available. ...
Although rates are always changing, as of right now, they have quietly fallen over the past few months. Many people have waited for them to drop before considering a refinance, but now might be to the time to check with your loan officer to get a rate update. Sometimes, a refinance can even make sense if you’re switching from a longer term mortgage to a shorter one.
In order to change the terms of your mortgage, you have to refinance. Refinancing is when another lender agrees to buy out your existing mortgage with a new one that has new terms. In order to determine whether refinancing is the right thing for you and your situation, you should consider the following factors first…
What New Terms Can You Get?
How do the new terms differ from your current terms? The difference in rates is obviously a large factor, but you also want to consider duration, loan type, prepayment penalties, and more.
How Much Will You Save?
When you stack up your current terms against the potential new mortgage, how much would you really end up saving by refinancing? Make sure you work out the numbers with your loan officer, and don’t forget to account for the closing costs of a refinance mortgage.
Follow The Mortgage Rate Projection
Will interest rates continue to go down? Have they reached a standstill? You might want to move quickly and make sure you can lock the rate with your mortgage ...
When consumers first think of refinancing an existing mortgage loan, typically it’s because there’s new out about falling interest rates. In today’s environment however, especially with mortgage rates being as low as they are for such an extended period of time, refinancing to lower a monthly payment is happening with less and less frequency. But it’s not always just about the current rate on a mortgage compared with market rates. A mortgage refinance can still make sense in New Jersey or other areas in this environment for many.
One reason to refinance now would be to consolidate debt. By paying off higher interest debt with a lower rate mortgage loan can save money. The most competitive interest rates are typically those associated with a first lien mortgage. Higher interest rates can be attached to other consumer credit obligations such as credit cards or automobile loans, student loans or home equity lines of credit, or HELOCs.
To see if this strategy works for you, take a few moments and gather your most recent credit card and consumer debt statements. List each account, the current balance, minimum monthly payment and interest rate associated with that account. When finished, take a look at the total monthly payments as well as the total outstanding debt.
Next, add the amount of these debts to your current mortgage balance. Then, contact your loan officer to get an update on where mortgage rates are today and compare what your new mortgage payment ...