05
Nov
By support
Home Mortgage Tips

You Ask, We Answer: What is a “Reverse Mortgage”?

You Ask, We Answer: What is a Reverse MortgageIf you’ve recently considered your options for taking some of the equity out of your home you may have heard about reverse mortgage loans. If you meet the requirements for a reverse mortgage it can be an excellent way to tap into the value of your home, freeing up that cash to be reinvested or used for other purposes.

In today’s blog post we’ll explore reverse mortgage loans, explaining how they work and whether or not you’re qualified to receive one.

How Does a Reverse Mortgage Work?

As the name implies, a reverse mortgage is the opposite of a traditional or “forward” mortgage in which you borrow a lump sum of money from a lender to buy a home, paying it back to them over time. With a “reverse” mortgage, instead of paying the lender you will receive money from them which does not have to be repaid until you are either no longer using that house or condo as your primary home or until you fail to meet the obligations of the mortgage contract.

Note that a reverse mortgage is still a loan, which means you will still be required to pay interest on it. As your loan balance increases with principal and interest each month the amount of equity you have in your home will decrease accordingly.

Do I Qualify for a Reverse Mortgage?

According to the federal Consumer Financial Protection Bureau, there are a number of requirements that you must meet in order to qualify for a reverse mortgage. You must be at least 62 years of age when you apply, the home you’re applying with must be your primary residence, and most or all of your outstanding mortgage debt on the home must be paid off.

If you still owe money on your original or second mortgage against the home note that part of the money from the reverse mortgage must be used to pay this debt off.

How Much Can I Borrow in a Reverse Mortgage?

Like any type of loan, the amount of money that you can receive with a reverse mortgage depends on a variety of factors. Your age, the value of your home, any outstanding mortgage debt, current interest rates and Federal Housing Administration requirements will all be taken into consideration when determining how much you will qualify for.

While a reverse mortgage isn’t terribly complex, there is certainly more to the process that can be covered in a single blog post. For more information, contact your local mortgage professional today and they can share the specifics of how you might qualify for a reverse mortgage and whether or not it’s your best option for making use of some of your home equity.

28
Oct
By support
Home Mortgage Tips

Buying a Home? 4 Steps You Can Take to Ensure You Start out with a Low Monthly Mortgage Payment

Buying a Home? 4 Steps You Can Take to Ensure You Start out with a Low Monthly Mortgage PaymentAre you thinking about buying a new house or condo? If so, you’ve likely given some thought to your mortgage and as to how you can pay as little as possible in order to own your new home.

Below we’ll share four easy steps that you can take to ensure you start out with an affordable monthly mortgage payment.

Make A Large Down Payment On Your Home

The easiest way to reduce your monthly payment is to invest as much as possible in your down payment. The less you have to borrow, the less you’ll be required to pay back.

If you can put a sizeable amount down on your home you’ll find that your monthly payments are going to be very manageable. You’ll also save a lot of money in interest.

Maintain A High Credit Score

When a lender assesses your financial history they’ll take an in-depth look at your credit score in order to determine how much risk you present to them. If you’ve kept a clean credit rating and have a high score, it’s likely that you will qualify for a lower interest rate than someone with a lower credit score – even if you both have the same monthly income.

Buy A Smaller, More Efficient Home

When you’ve made your short list of homes and you’re scheduling your viewings, ask yourself – do you need a home this big, or this expensive? If you can do with a smaller, more efficient home you can reduce the amount of mortgage financing that you require and this will in turn reduce the amount that you need to pay each month.

Consider A Longer Mortgage Term

Finally, if you need to reduce your monthly payment at any cost you can stretch out your mortgage repayment period by a few years. Note that while this can reduce your payment amount it will actually increase the total amount that you end up paying back as you’ll pay more in interest.

While the above are general tips for reducing your mortgage payment, it’s likely that there are other strategies that are unique to your financial situation. Contact your local mortgage professional at your convenience and they’ll be able to share insights that are relevant to your income, your credit and the price range you’re looking to buy into.

15
Oct
By support
Home Mortgage Tips

Refinance Now or Wait? How to Determine the Best Time to Refinance Your Mortgage

Refinance Now or Wait? How to Determine the Best Time to Refinance Your MortgageRefinancing your mortgage is a great way to reduce your monthly payments or take out some of the equity in your home to reinvest in renovations, upgrades or in other areas in your financial portfolio.

Let’s take a quick look at a few questions that you can ask yourself in order to determine whether you should refinance now or wait until sometime in the future.

Can You Lock In A Lower Interest Rate?

Depending on when you first purchased your home and took out your mortgage, you may find that by refinancing now you can lock in a lower interest rate.

Getting a lower rate can end up saving you thousands of dollars a year in interest, but you’ll need to weigh the closing costs of the refinancing against the savings you’ll obtain to ensure that refinancing is worthwhile.

How Much Do You Owe On The Home?

If you still owe a significant amount on your home you may find that it’s worth refinancing, especially if you’re confident that you won’t be selling the home any time soon. Conversely, if you’re very close to having your mortgage paid off you may find that refinancing has little benefit.

Do You Need To Tap Into Your Home Equity?

If you feel that now is the time to tap into the equity you’ve built up in your home over time in order to cover renovation or upgrade costs you may want to consider refinancing. This will allow you to take out a large chunk of cash without having to open a new loan or line of credit. If possible, try to secure a lower interest rate for added benefit.

Do You Plan On Moving?

If you’re planning on moving in the next couple of years then you may want to hold off on refinancing your mortgage. As mentioned above, there are closing costs attached with a refinancing deal and these must be factored in when assessing whether or not you stand to gain or lose.

If you’re staying in your home for the near future there’s a far better chance that the costs of a refinancing will be covered by the amount that you save.

Every financial situation is unique, and you may find that you have other questions about refinancing that aren’t listed above. Don’t hesitate to contact your mortgage professional as they’ve worked with all sorts of refinancing clients and can share helpful advice that is relevant to your situation.