I am a senior citizen and know quit a lot about mortgages and finance. I believe that
a reverse mortgage is the best thing the Government has done since allowing any Veteran
the opportunity to buy a house with zero down payment and also be able to take and refinance their current loan to 100% of the V.A. limits in their area. Consumers at least
recognize that reverse mortgages have been around for a long time but will accept almost
anybody’s criticism of those loans.
The two best reasons for getting a reverse mortgage if you are at least 62 years of age and
own a house with some equity in it, are qualified for the loan if you have the age and enough equity in your house, and you do not make any payments on the reverse as long as you reside in your house.
When you get your reverse mortgage you are either trading in your current mortgage for a reverse mortgage that will accrue interest until you leave the house whether at the end of your life or you have decided to sell, trade or have given the house to one of the heirs before your ready to leave the house. If that happens the balance on the reverse must be paid and the house reverts back to the owner or his heir or the buyer of the property.
If your house was free and clear when you took out your reverse mortgage you would receive a portion of your equity in cash or in a line of credit which isn’t ever paid back until what I outlined in the previous paragraph happens.
Now you really know what happens and how it works and owning a reverse mortgage doesn’t raise your insurance, makes you get less of your social security on a monthly basis
or any other scenario. When these are the results then you need to understand why you need a reverse mortgage.
Any by the way your house still can increase in value when you have a reverse mortgage.
In fact most of the houses rise faster in value than the mortgage that is accruing. Before you sign your loan you will have an estimate of the increase in your home in the future and the total increase in the mortgage as the interest accrues.
You owe it to yourself if you are a senior to look at and understand how this vehicle works. It just might be the best loan you have ever seen. My next article will highlight why you
probably need a reverse mortgage! Stay focused.
Have you ever gone to a cocktail party and overhear several people discussing who has the lowest interest rate on their mortgage. If you ever thought this was strange you couldn’t be smarter about it if you were a financial gur. It would not be out of place to discuss the length of your mortgage, with the shorter length the one who should be bragging, but in reality nobody should be too happy about that situation for one reason: a mortgage is a DEBT, not an ASSET.
I bring this up because consumers really know very little about mortgages, and most follow their parents example when entering the mortgage market. Little did they know that their parents didn’t have much of a choice when they got their first mortgage. The mortgage market 40 years ago or longer was similar to the Ford Motor Company who stated you can have any color on our automobile as long as it was black. Forty years ago or longer your choice was almost only a 30 year loan. But not any more!
At this point in this blog you might think I would start discussing the various loans, but I won’t bore you with that. Instead I will discuss how to avoid mortgages or at least keep them short and sweet. A very small number of people buy their first house with cash, unless they are professional athletes, entertainers, inventors, etc. or lottery winners. The vast majority will need mortgages.
At this point I want to show how you can minimize your first mortgage. It starts with being pe-qualified before going looking for a house. Learn quickly that everything above what the mortgage professional feels is your mortgage maximum limit will hurt you in ways you would never think about.
1. If you try to buy too much house you probably will have to add years to your
loan to be able to qualify and comfortably pay your monthly mortgage. That means
more interest for a longer time, and less principal pay down.
2. You need to recognize the current tax advantages in a mortgage combined with
the house you are buying. We have the ability to deduct our mortgage interest
and get tax free cash when we sell our owner occupied house that you live in
for a minimum of two years.
3. It is important to realize the aforementioned tax breaks can be changed at any
time by the Government. This should inforce your resolve to pay attention to
number 1 above.
All great successes generally come from those who understand what they are doing and
continually go over their methodology to make sure they are on the right page! Try it and
enjoy your success.
The U.S. Bond market is rallying and the yields are falling. These yields are the benchmarks for our mortgage rates and therefore the title of this blog is right on target.It is time to start changing your financial life from “carrying on” to getting it done. I accept no excuses for lack of action but you are the one who really shouldn’t accept any excuses. I will tell you why.
Most mortgage advertisements on the radio or television speak to those who hold 30 year loans.
The rates on 30 year loans are way down and they want you to refinance your current loan to a new 30 year loan and earn lots of money and praise from your friends. It seems like the right move because your new monthly payment will be lower; thus the savings. WRONG!
Whether you have had your 30 year loan for 3 years, 7 years, 12 years etc. your refinance will get you another 30 year loan. You do not get credit for the years of interest that you have paid. At the end of your new refinanced loan, 30 year from now, you will see how much money you have lost. Don’t kid yourself about selling the house in 5 years and then it won’t be as awful as I am telling you. If you really care look at the amount of principal you will pay off in 5 years on your current loan and compare how much you will pay off on your new loan and you will find a big shock waiting!. That is all I am going to say about the wrong way.
A 30 year loan takes about 19 years to pay off half of it. A 15 year loan a bit longer than 8 years.
A 30 year loan carries a higher interest rate than a 15 year loan. You will be done with your 15 year loan in half the time of a 30 year, and if you paid yourself the same payment during the second 15 years you would have all your money back when your old 30 year would be over.
The 15 year loans are in the mid 2% range right now. That alone should make you move to a 15 year loan. However, most homeowners won’t do it because of the higher monthly payment that comes with the 15 year loan. We can get a 15 year loan at the SAME PAYMENT that you are making on your 30 year loan.
There are 3 ways to accomplish keeping the same payment on the new 15 year loan as you had on the 30 year loan. The first way has to do with your current interest rate, how long you have had your 30 year loan and your current loan balance.
The second way has to do with your current liabilities that are paid on a monthly basis.
The last way has to do with our knowledge of the mortgage industry.
Call or write us and let us show you how we can get this done for you. Now is the Right Time
to move on this because rates do change without notice!