About reverse mortgage

The reverse mortgage turns the equity of the home into tax free cash. Reverse mortgage is more of a loan advance. While the borrower lives in the home, the borrower does not repay the loan.
Any senior who is sixty two years or older is eligible for the reverse mortgage. The home must have some kind of equity. And, the home is the primary residence of the borrower.

Reverse mortgage differs from home equity loan. The mortgage lenders pay the borrower the lump sum, regular periodic payment, line of credit, or combination. The line of credit allows the borrower to choose how and when to get payment. The repayment of loan only happens in reverse mortgage when borrower permanently moves, dies, or sells.

At the time of repayment, the mortgage lenders use the home to repay the loan. The home pays off the principal, interest, and closing costs of reverse mortgage. Anything extra goes to the remaining relatives. In case of deficit, the mortgage lenders make up for the deficit.

Since the borrower retains the title of home on reverse mortgage, the borrower remains the owner of the home. He or she is responsible for the maintenance, property tax, insurance, and utilities. The mortgage interests in reverse mortgage are not mortgage interest tax deduction. However, the borrower can claim the mortgage interest on current first and second mortgage. Even though the borrower is still paying off the first and second mortgages, the mortgage lenders can allow the borrower to go on reverse mortgage.

The borrower can owe only on how much is the home. The mortgage lenders can only go after the house to pay off the mortgage. The assets and estate of the borrower are safe from the mortgage lenders. This is more commonly known as non-recourse loan.


For more resources about reverse mortgages or about reverse mortgage for seniors and especially about information on reverse mortgages please review these pages.

Mortgage Refinancing - Americans are Reaching Critical Mass.

Over the last 10 years the American housing market has been booming, property values rising across the board and construction was up to near all time highs. This led to empowerment of the American homeowner and first time buyers. With more possibilities due to the resulting rise in equity, countless homeowners began the process of improvement of their homes and setting their sites on bigger and better.


At the end of the last decade the first time home buyer, new to the real estate market and unaware of the trends in real estate, began to tap into their new found equity and over the next several years their spending habits began to look less and less responsible. Thinking the “lucky streak” of rising equity would never end and fueled by the hype in the media, Mr. and Mrs. Homeowner begin to take on more and more debt than they will eventually be capable of handling.


Fast forward 8 years, the market generally speaking is beginning to cool off with real estate values at near all time highs. The fast 2 day time on market has turned into 2 months, 4 months and now average time is beginning to look like 6 months or more.


Being in the mortgage business, my wife and I had begun to realize just how serious this situation was becoming as client after client kept coming back to us for refi’s. Don’t get me wrong, we didn’t mind all that much however, we knew that many of these clients, no matter how often we suggested, were in denial. They weren’t going to change their spending habits for us or for themselves.


Finally, critical mass was reached. The next time we looked at their situation, there was no equity in their home, LTV was shot. Credit scores dropped, bills flowing in and a real estate market that was beginning to get flooded with inventory, short sales or long time on market. There was no easy answer to be found.


Just by chance we came in contact with a real estate agent we worked with in the past, an old timer in the industry who nearly had her watch set by the market trends. Come to find out she was phasing out of the business for a new venture. Something she said was “The right product for the right time”. This new business turned out to be a concept that is not necessarily new, but has not been put to use in a systematic and deliberate way by the average person, the tools just weren’t there before now. We’re talking about interest arbitrage; interest cancellation. This involves “floating” the banks money to cancel interest on a first mortgage and accelerating the pay off in record time.


We thought this sounded well and good, but we wanted to research this ourselves. In the end it all boiled down to the fact that we couldn’t dispute the math. What we found was impressive to say the least. This turned out to be a “roadmap” that we and our clients can use to get on financial track and stay there.

Greg Campbell is a San Diego based entrepreneur and independent agent for United First Financial. Greg's focus is helping people accelerate the payoff of their largest debt...their mortgage. With Greg's tactics, this can be done in as little as 1/2 to 1/3 the time with little if any change to your current lifestyle. For more info visit: www.DissolveYourMortgage.com

All about Repayment Mortgages

When applying for mortgages borrowers have the choice of obtaining interest only or repayment mortgages.

Interest only mortgages require the borrower to only pay the interest charged each month on the mortgage. The balance of the mortgage remains the same throughout the entire term of the loan.

With repayment mortgages, the monthly payments to the lender comprise an element of interest charged and an element of capital repayment. As long as all the repayments are made on time, repayment mortgages are guaranteed to be repaid at the end of the term.

Repayment mortgages are also known as “capital and interest mortgages” because the capital balance is repaid along with the interest payments.

During the term of repayment mortgages the monthly payments made to the lender comprise both an interest portion and a capital repayment portion. At the beginning of the term of the mortgage the interest portion is high and the capital portion low.

Over time the interest portion diminishes and the amount of capital repaid increases. At the end of the term of repayment mortgages, the capital portion should be fully repaid.

Repayment mortgages are less risky than interest only mortgages because there will be no outstanding balance at the end of the term. Borrowers will therefore not be required to establish a separate Capital Repayment Vehicle (CRV) such as an endowment policy.

Home owners with repayment mortgages are also less likely to suffer from negative equity because they will be constantly decreasing the capital portion of their loan.

Regardless of the reduced risk, borrowers of repayment mortgages should take out decreasing term assurance policies. This type of assurance policy reduces the sum assured roughly in line with the reducing mortgage balance. This will insure that the balance of the loan is repaid upon death of the borrower.

By selecting the right type of assurance policy, the borrower will insure that the balance of the mortgage is paid off in full either when the term of the mortgage expires or upon death if they die during the term of the loan.

Repayment mortgages therefore have both advantages and disadvantages and borrowers should be well informed of both before applying. Independent mortgage advisers can help borrowers who cannot decide whether to apply for interest only or repayment mortgages by providing expert and impartial advice.

Visit UK Mortgage Source for up-to-date information on Repayment Mortgages

What type of mortgage do you want?

If you are looking for a mortgage one of the things you have to decide on is which type of mortgage you want. There are six main types of mortgage each with their own features.

Standard variable rate
All lenders have a Standard Variable Rate (SVR) which is variable and normally fluctuates with any changes in Bank of England base rate. Although it is not directly linked to the Bank of England base rate lenders will generally adjust their SVR in response to any changes in base rate. Most mortgages with special terms revert to the SVR after the period of the special term expires.

Discount Rate
A discount rate mortgage is a variable rate mortgage which offers a discount from the lenders standard variable rate for an initial period of time. The lower discounted rate increases or decreases in line with any changes in the lenders standard variable rate. As a general rule the shorter the period of the discount the higher the level of the discount. At the end of the discounted period you will revert to the lenders standard variable rate.

Tracker Rate
A tracker rate mortgage is another type of variable rate mortgage however the interest rate is linked to the Bank of England base rate rather than the lenders standard variable rate. The lender will charge the borrower a percentage, for example 0.5%, on top of the base rate. This rate can apply for a certain period or for the term of the mortgage

Fixed rate
A fixed rate mortgage fixes your interest rate for a period of time, meaning your monthly payment won't change. This period can be as short as 1 year or as long as 25 years. As a general rule the longer the period of the fixed rate the higher the interest rate that applies. If you are a first time buyer you may like the idea of a fixed rate product, as having fixed monthly payments will make it easier for you to budget. At the end of the fixed rate you will revert to the lender’s standard variable rate which is often higher than the fixed rate.

Capped Rate
A capped rate mortgage is a variable rate mortgage with a maximum interest rate for a specific period. The interest rate cannot rise above the pre agreed capped rate during the specified period. If the lender’s interest rates fall below the capped rate the borrower will benefit from any reduction. Capped rates may also have a 'collar' which means the rate can not fall below this level.

Current Account Mortgage
A current account mortgage (CAM), is a variable rate mortgage which is linked to your bank account. The interest is calculated daily and any money in your bank account can be offset against the outstanding mortgage balance. This can be used to reduce your monthly payments or reduce the term of the loan. Interest is calculated on a daily basis on a CAM and they offer a lot of flexibility. CAMs are often suitable for people with fluctuating incomes. They can be particularly tax efficient for higher rate taxpayers.

Offset Mortgage
An offset mortgage is similar to a CAM however it often uses a savings account balance as well as your current account balance. Any savings accumulated in the savings account and your current account can be offset against the outstanding mortgage balance.

This will have the effect of reducing the interest charged on your mortgage which can either reduce your monthly payment or reduce the term of the mortgage.When you are thinking about which type of mortgage that you are going to take consider these points.

The best way to do this is to use a mortgage comparison site that allows you to look at all the mortgage types: one that is independent of all lenders and compares the whole of the market; and one that enables you to apply directly to the lender.

This post is produced by Francis Ghiloni

Getting a Mortgage Loan

A mortgage loan: it's the first step to buying real estate, and considering that it is a special few that have enough money to pay for a piece of property without a loan, so there is no need for you to feel alone in this process.

The first thing you'll want to do is find a good mortgage loan officer. The first step is to get pre-qualified. This process requires you to provide the loan officer with your record of employment, including what your income is. They in turn contact a bank to get an estimate of what they would be willing to lend you based on your income.Once you have pre-qualification, you can really begin your homes search. You know how much you can afford for a home, and a Realtor® will take you seriously as a prospective buyer, and show you homes in your likely price range.

Once you have found a home you want, you can make an offer on it, however soon you will need to become pre-approved for a mortgage. Pre-approval is a little different, and usual doesn't happen until you know the exact home you want. A bank then asses's the value and condition of the home as compared to the asking price, and this contributes to their willingness to loan you money to buy it. The bank will also then need more detailed financial information from you, such as pay stubs, tax return info, and your full credit history. This is where outstanding debts or missed payments for things will come up, and could hinder your ability to get a mortgage loan. Another thing that can prevent you from getting the loan you want is costly bills.

For example, if you've recently made another large purchase, such as a vehicle or costly entertainment system, and are on a monthly payment program, the bank will factor this against your income to determine if you are at risk of de-faulting on your mortgage loan because of too many monthly payments.

Even if you are willing to eat beans and rice for a few months until you've paid down your debts, the bank won't factor that in. It's best to avoid making a large purchase if you are considering applying for a mortgage loan, or you risk the chance of being turned down.So if you are wanting to begin a home search, contact a mortgage loan officer for help and get pre-qualified first.

This post is produced by the writing department John Mejia. If you are looking for Birmingham Alabama real estate, visit The Mejia Group.