Reverse Mortgages tend to be generally favored for those homeowners older than 62 who tend to be house-rich and cash-poor. The greying of American baby-boomers continues. For many, their home is their most significant asset as they head into retirement.

With a reverse mortgage, the lender makes payments to the borrower; i.e., the reverse of a normal mortgage. The loan is repaid from the proceeds of the estate when the borrower moves or passes away.

Those considering a reverse mortgage are wise to consider the following:

* understand that often adult children help their senior parents secure the loan,
* how to keep your second home deed in your and your spouse’s name,
* what are the property requirements and financing fees of the loan,
* how to select among a multitude of lenders,
* spending the proceeds and estimating leftover equity,
* understanding how to sharing the decision making process with family members.

While a reverse mortgage provides a guaranteed source of tax-free income for the rest of the homeowner’s life, the loan can be very expensive. Costly fees, interest rates, mortgage insurance, and closing costs may apply to acquisition and maintenance of the loan.

Also, while the loan allows the recipient to remain in the home, a reverse mortgage reduces the home equity amount left to the heirs.

And, although the homeowner is relieved of the responsibility of making a monthly mortgage payment, a reverse mortgage is more expensive and binding than establishing a home equity line of credit. (more…)

search for : Reverse Mortgages, baby-boomers, tax-free income

The process of acquiring a mortgage is easily understood if home and condo buyers remember these simple mortgage-related terms; qualification, preapproval, approval and lock.

Qualification is a process that investigates your income, assets and current debts to determine if you (and your spouse) can handle the loan payments for some specified amount.

Preapproval is a commitment by a lender to make a loan prior to the identification of a specific property. But remember, pre-approval is conditional, based on a number of factors just prior to closing on the mortgage.

For approval to occur, a specific property (at an appraised value) is identified, and the loan details are finalized.

Lock is a commitment by the lender to a specified interest rate and points. Since locking normally imposes a cost for the lenders, some charge a nonrefundable fee, which may be credited back to the borrower at closing. (more…)

search for : qualification, preapproval, approval, lock