The Home Equity Conversion Mortgage (HECM) more commonly referred to as reverse mortgages was created by the Federal Housing Administration (FHA). These Federally insured loans are designed for borrowers over the age of 62. They truly are a mortgage in reverse. A reverse mortgage will eliminate the borrower's current monthly payment and give them access to the available equity in their home.
Over time a reverse mortgage balance will grow. The monthly payment has been eliminated and the loan will accrue an interest charge each month which is added to the balance of the loan. This type of loan is referred to as a negative amortization loan. Rather than paying down the balance as you would on a traditional mortgage loan your loan balance grows over time. Because these loans are federally insured by the FHA there was quite a bit of thought that was put into determining the size of these loans. The size of any loan as compared to the value of the home is known as the loan to value ratio. On a traditional or forward loan through the FHA you can cash out up to 85% of your home's value. The remainder, after you have paid your existing mortgage balance and customary closing cost is yours to use as you wish. A reverse mortgage's starting loan to value ratio is much lower than a traditional refinance. The FHA has a formula that takes into consideration the borrowers age, life expectancy, home value and location of the property to determine the available loan to value on a reverse mortgage. The rule of thumb is to take the youngest borrower's age and subtract 10 years to determine the maximum allowable loan to value on a reverse mortgage transaction. You should consult a reverse mortgage lender to determine what you may qualify for. The reason for this lower qualifying loan to value is twofold. First the Federal Housing Administration understands that these loans will accrue interest charges over time and the balance will grow. Second reverse mortgages were not designed for equity poor borrowers. The idea is that a typical senior has paid for their home for the majority of their adult lives and now may qualify to benefit from that increasing home equity that they have worked so hard to build.
There are four ways to access the equity in your home through a reverse mortgage program. You can take the money in a lump sum at the time of settlement as you would in a traditional loan. You can set the available equity aside as a line of credit that you can use as you need it. The line of credit option takes into account that your home will most likely appreciate over time and the available credit also increases each year that the line of credit remains open. You can use the available equity to pay your self a pre determined amount each month over a certain period of time. Finally the lender can determine, based on the available equity, a term payment. This term amount would be paid to the borrower each month for the remainder of their life.
There are some common misconceptions about reverse mortgages. One misunderstanding is that the bank owns my house when I die. If you have a traditional mortgage or a reverse mortgage and something happens to you and the payments lapse the bank does own your house and will begin foreclosure proceedings. That's the reality of any mortgage loan. Similar to a traditional loan a reverse mortgage lender will place a lien against your home for the amount owed. If you have had a legal will and testament drafted or if your property is held in trust, as is the case on a traditional loan, you are still the vested owner of the property and your heirs have a right to any available equity should something happen to you.
I lose my mortgage interest tax deduction. This one is true. This is because you are no longer paying interest instead interest is accruing against your home. The reverse mortgage has eliminated your mortgage payment. Any refund on your taxes based on mortgage interest paid will be more than made up for by the fact that there is no longer a monthly mortgage payment. Additionally, any proceeds you take from a reverse mortgage are not considered income, are not taxable and have no affect on your current social security, Medicare or Medicaid benefits.
My heirs are not over 62, if something happens to me they do not qualify for a reverse mortgage, then what? As I mentioned, you remain the vested owner of your home. If the home is left to your heirs who are under 62 years of age they have the option to sell the property or refinance the reverse mortgage loan into a traditional loan. The Federal Housing Administration considers reverse mortgages as non-recourse loans. What that means to you is that the reverse mortgage will never be greater than the fair market value of your home. Let's say you beat the odds and live a lot longer than the formulas and experts thought you would live. You live to be 110 years old. As long as you are the vested owner and the home is your primary residence the reverse mortgage will remain outstanding against your home. After your passing the reverse mortgage has grown to a balance of $125,000.00. Your heirs look at the neighborhood and surmise that they can not get anymore than $120,000.00 for the home. They list the home, accept offers and will need to have the property appraised. If it is determined that $120,000 is actually the fair market value of the home; as a non-recourse loan the reverse mortgage with a $125,000.00 balance will be considered paid and satisfied after the fair market sale of the home of $120,000.00.
The intention of this article was to give the reader a better understanding of what a reverse mortgage is, how it works and to address some of the more common misunderstandings about reverse mortgages. I am sure that you probably have more questions. If your home is in Arizona and I can be of further assistance, please visit my web site [http://www.az-homeloan.com] for additional information. The most important thing is that you contact a trusted mortgage professional to answer your questions and guide you through the reverse mortgage process.
Over time a reverse mortgage balance will grow. The monthly payment has been eliminated and the loan will accrue an interest charge each month which is added to the balance of the loan. This type of loan is referred to as a negative amortization loan. Rather than paying down the balance as you would on a traditional mortgage loan your loan balance grows over time. Because these loans are federally insured by the FHA there was quite a bit of thought that was put into determining the size of these loans. The size of any loan as compared to the value of the home is known as the loan to value ratio. On a traditional or forward loan through the FHA you can cash out up to 85% of your home's value. The remainder, after you have paid your existing mortgage balance and customary closing cost is yours to use as you wish. A reverse mortgage's starting loan to value ratio is much lower than a traditional refinance. The FHA has a formula that takes into consideration the borrowers age, life expectancy, home value and location of the property to determine the available loan to value on a reverse mortgage. The rule of thumb is to take the youngest borrower's age and subtract 10 years to determine the maximum allowable loan to value on a reverse mortgage transaction. You should consult a reverse mortgage lender to determine what you may qualify for. The reason for this lower qualifying loan to value is twofold. First the Federal Housing Administration understands that these loans will accrue interest charges over time and the balance will grow. Second reverse mortgages were not designed for equity poor borrowers. The idea is that a typical senior has paid for their home for the majority of their adult lives and now may qualify to benefit from that increasing home equity that they have worked so hard to build.
There are four ways to access the equity in your home through a reverse mortgage program. You can take the money in a lump sum at the time of settlement as you would in a traditional loan. You can set the available equity aside as a line of credit that you can use as you need it. The line of credit option takes into account that your home will most likely appreciate over time and the available credit also increases each year that the line of credit remains open. You can use the available equity to pay your self a pre determined amount each month over a certain period of time. Finally the lender can determine, based on the available equity, a term payment. This term amount would be paid to the borrower each month for the remainder of their life.
There are some common misconceptions about reverse mortgages. One misunderstanding is that the bank owns my house when I die. If you have a traditional mortgage or a reverse mortgage and something happens to you and the payments lapse the bank does own your house and will begin foreclosure proceedings. That's the reality of any mortgage loan. Similar to a traditional loan a reverse mortgage lender will place a lien against your home for the amount owed. If you have had a legal will and testament drafted or if your property is held in trust, as is the case on a traditional loan, you are still the vested owner of the property and your heirs have a right to any available equity should something happen to you.
I lose my mortgage interest tax deduction. This one is true. This is because you are no longer paying interest instead interest is accruing against your home. The reverse mortgage has eliminated your mortgage payment. Any refund on your taxes based on mortgage interest paid will be more than made up for by the fact that there is no longer a monthly mortgage payment. Additionally, any proceeds you take from a reverse mortgage are not considered income, are not taxable and have no affect on your current social security, Medicare or Medicaid benefits.
My heirs are not over 62, if something happens to me they do not qualify for a reverse mortgage, then what? As I mentioned, you remain the vested owner of your home. If the home is left to your heirs who are under 62 years of age they have the option to sell the property or refinance the reverse mortgage loan into a traditional loan. The Federal Housing Administration considers reverse mortgages as non-recourse loans. What that means to you is that the reverse mortgage will never be greater than the fair market value of your home. Let's say you beat the odds and live a lot longer than the formulas and experts thought you would live. You live to be 110 years old. As long as you are the vested owner and the home is your primary residence the reverse mortgage will remain outstanding against your home. After your passing the reverse mortgage has grown to a balance of $125,000.00. Your heirs look at the neighborhood and surmise that they can not get anymore than $120,000.00 for the home. They list the home, accept offers and will need to have the property appraised. If it is determined that $120,000 is actually the fair market value of the home; as a non-recourse loan the reverse mortgage with a $125,000.00 balance will be considered paid and satisfied after the fair market sale of the home of $120,000.00.
The intention of this article was to give the reader a better understanding of what a reverse mortgage is, how it works and to address some of the more common misunderstandings about reverse mortgages. I am sure that you probably have more questions. If your home is in Arizona and I can be of further assistance, please visit my web site [http://www.az-homeloan.com] for additional information. The most important thing is that you contact a trusted mortgage professional to answer your questions and guide you through the reverse mortgage process.
Before you start shopping around for a mortgage in the UK, it's important to understand how mortgages are regulated and sold. There are some things you need to know and consider before you can go out looking for a mortgage.
The Financial Services Authority (FSA) requires lenders to show you a special document called keyfacts. Make sure you read the keyfacts before getting a mortgage or choosing a financial advisor. The key facts will help you see the features of the mortgage product, how much it will cost you and also help you understand what service you are being offered. You'll also be able to use this document to compare mortgage products or services from different lenders.
Also, check that the firm you are dealing with is authorised by the FSA. If they are not authorised you will not have access to complaints procedures and compensation schemes if things go wrong.
Some of the things you should consider when choosing a mortgage lender includes:
- Competitiveness of the lender's rates,
- Mortgage fees and penalties,
- Customer service and the lender's reputation.
- Trust (You'll want a lender you can trust, and a company you can work with effectively since you'll have to deal with this lender for many years to come.)
Ask your friends or family for recommendations of potential mortgage lenders or brokers. Then contact some of the lenders and discuss your needs with them. Using keyfacts to compare different mortgage packages and services will help you get a better deal. Read expert opinions in national newspapers and magazines. These publications usually publish editorials that rate mortgage and loan deals from various banks and lenders. This information will give you a better idea of what to expect when you start shopping around for a mortgage.
Take time to choose a lender so that you can save money on your mortgage. There are hundreds of mortgage deals available out there so don't be tempted to settle for the first offer before finding out what deals are available elsewhere. Shopping around for a mortgage will help you to get the best financing deal. If you don't have the time to do it yourself, you can use the services of a broker or use an internet site that offers a mortgage comparison facility.
Finally, think carefully before securing other debts against your home. Your home may be repossessed if you do not keep up repayments on your mortgage.
The Financial Services Authority (FSA) requires lenders to show you a special document called keyfacts. Make sure you read the keyfacts before getting a mortgage or choosing a financial advisor. The key facts will help you see the features of the mortgage product, how much it will cost you and also help you understand what service you are being offered. You'll also be able to use this document to compare mortgage products or services from different lenders.
Also, check that the firm you are dealing with is authorised by the FSA. If they are not authorised you will not have access to complaints procedures and compensation schemes if things go wrong.
Some of the things you should consider when choosing a mortgage lender includes:
- Competitiveness of the lender's rates,
- Mortgage fees and penalties,
- Customer service and the lender's reputation.
- Trust (You'll want a lender you can trust, and a company you can work with effectively since you'll have to deal with this lender for many years to come.)
Ask your friends or family for recommendations of potential mortgage lenders or brokers. Then contact some of the lenders and discuss your needs with them. Using keyfacts to compare different mortgage packages and services will help you get a better deal. Read expert opinions in national newspapers and magazines. These publications usually publish editorials that rate mortgage and loan deals from various banks and lenders. This information will give you a better idea of what to expect when you start shopping around for a mortgage.
Take time to choose a lender so that you can save money on your mortgage. There are hundreds of mortgage deals available out there so don't be tempted to settle for the first offer before finding out what deals are available elsewhere. Shopping around for a mortgage will help you to get the best financing deal. If you don't have the time to do it yourself, you can use the services of a broker or use an internet site that offers a mortgage comparison facility.
Finally, think carefully before securing other debts against your home. Your home may be repossessed if you do not keep up repayments on your mortgage.
Do you need cash in order to pay down some outstanding bills or to pay for an unexpected expense, such as a trip or a medical emergency?
If you are a homeowner, you may be in luck. For homeowners, there are two ways you can leverage the equity you have in your home in order to get the cash you need. The first way is to take out a second mortgage loan. The second way is to refinance your home.
What if you have a bad credit score? No worries: since you will be using the equity in your home as a form of loan collateral, you can still qualify for reasonable second mortgage loan interest rates - even with a low credit score.
If you are trying to decide between bad credit second mortgage loans and home refinancing, here are 5 FAQs that can help:
1. What is the difference between second mortgage loans and home refinancing?
A: A second mortgage loan - also known as a home equity loan - involves leaving your existing first mortgage alone. Instead, you are just taking out an additional mortgage, usually at a higher interest rate than you have with your first mortgage.
On the other hand, with a home refinancing loan, you are paying off any existing first and/or second mortgages with a new mortgage loan. And if you need extra cash in the process, you just take out a larger loan than what you currently owe on your home now. You end up with a larger loan principal and possibly slightly higher monthly payments, but you will have the cash you need.
2. Which type of loan is easier to qualify for if I have a bad credit score?
A: Both types of loans are easy to qualify for if you have a bad credit score. In both cases, the lender will look at several factors, including your credit score, the total amount of your outstanding (first and/or second) mortgage principal, and the current market value of your home.
3. Which option will allow me to get more cash in hand?
A: Both loans turn out about the same in this regard. Whether looking for a second mortgage or a home refinance, keep in mind that each lender will offer a certain loan-to-value (LTV) type loan. For example, an 80% LTV loan means that you will be able to borrow up to 80% of the total equity in your home. The higher the LTV, the more you can borrow.
4. Which option is lower cost to me in the long run?
A: Refinancing your existing home loan may be less costly, since it gives you the opportunity to possibly qualify for a lower interest rate than you have on your existing first mortgage. The result could be an overall lower cost of loan, which would save you more money in the long run.
5. Which option is faster?
A: Taking out a second mortgage (a home equity loan) is probably the fastest route for you to take because doing so does not involve your having to shop for a completely new first mortgage. In most cases, qualifying for a second mortgage loan takes less than an afternoon.
Bonus tip: if you have a bad credit score, be sure to shop for "bad credit second mortgage lenders" or "bad credit home equity loan lenders." These are the ones that are most likely to approve your loan, despite your low credit score.
If you are a homeowner, you may be in luck. For homeowners, there are two ways you can leverage the equity you have in your home in order to get the cash you need. The first way is to take out a second mortgage loan. The second way is to refinance your home.
What if you have a bad credit score? No worries: since you will be using the equity in your home as a form of loan collateral, you can still qualify for reasonable second mortgage loan interest rates - even with a low credit score.
If you are trying to decide between bad credit second mortgage loans and home refinancing, here are 5 FAQs that can help:
1. What is the difference between second mortgage loans and home refinancing?
A: A second mortgage loan - also known as a home equity loan - involves leaving your existing first mortgage alone. Instead, you are just taking out an additional mortgage, usually at a higher interest rate than you have with your first mortgage.
On the other hand, with a home refinancing loan, you are paying off any existing first and/or second mortgages with a new mortgage loan. And if you need extra cash in the process, you just take out a larger loan than what you currently owe on your home now. You end up with a larger loan principal and possibly slightly higher monthly payments, but you will have the cash you need.
2. Which type of loan is easier to qualify for if I have a bad credit score?
A: Both types of loans are easy to qualify for if you have a bad credit score. In both cases, the lender will look at several factors, including your credit score, the total amount of your outstanding (first and/or second) mortgage principal, and the current market value of your home.
3. Which option will allow me to get more cash in hand?
A: Both loans turn out about the same in this regard. Whether looking for a second mortgage or a home refinance, keep in mind that each lender will offer a certain loan-to-value (LTV) type loan. For example, an 80% LTV loan means that you will be able to borrow up to 80% of the total equity in your home. The higher the LTV, the more you can borrow.
4. Which option is lower cost to me in the long run?
A: Refinancing your existing home loan may be less costly, since it gives you the opportunity to possibly qualify for a lower interest rate than you have on your existing first mortgage. The result could be an overall lower cost of loan, which would save you more money in the long run.
5. Which option is faster?
A: Taking out a second mortgage (a home equity loan) is probably the fastest route for you to take because doing so does not involve your having to shop for a completely new first mortgage. In most cases, qualifying for a second mortgage loan takes less than an afternoon.
Bonus tip: if you have a bad credit score, be sure to shop for "bad credit second mortgage lenders" or "bad credit home equity loan lenders." These are the ones that are most likely to approve your loan, despite your low credit score.
When borrowers supply their forms of request for a mortgage loan, lead providers generate leads from the data supplied by borrowers and mail them to several brokers or lenders. Very often these leads get recycled, as they move from one broker or loan officer to the other. Such leads are known as Non Exclusive Mortgage Leads.
Though Non Exclusive Mortgage Leads have a downside related to confidentiality and speed of transfer, they are less expensive than Exclusive Mortgage Leads. More importantly, they can offer the best deal to the borrower. Let's take an example.
Maggie applies for a Non-Exclusive Mortgage Loan at a mortgage lead providing company. As hers is a Non Exclusive Mortgage Lead, the lead provider sends her lead to several loan officers and these people get in touch with her. As the loan officers increase, competition becomes stiffer. It is much like the difference between one person spending $100 and several people sharing the same $100.
In other words, in Non-Exclusive Leads, the chance of Maggie's bargaining with loan officers and getting the best deal is very bright. Though there is a basic difference between Exclusive and Non-Exclusive Mortgage Leads, in terms of confidentiality and competition, the mode of transfer of information from the Borrower to the Lender, through the Broker or otherwise, at the Lead Provider's Office or Online, face-to-face or telephonic, is a different matter that concerns speed.
Non Exclusive Mortgage Leads are less expensive for the lender to buy, but the competition is higher. This means that the lender has less choice dealing with Non Exclusive Leads than Exclusive Leads. This becomes the plus point for the borrower.
Exclusive Mortgage Leads provides detailed information about exclusive mortgage leads, exclusive internet mortgage leads, exclusive telemarketing mortgage leads, exclusive real time mortgage leads and more. Exclusive Mortgage Leads is the sister site of Life Insurance Leads.
Though Non Exclusive Mortgage Leads have a downside related to confidentiality and speed of transfer, they are less expensive than Exclusive Mortgage Leads. More importantly, they can offer the best deal to the borrower. Let's take an example.
Maggie applies for a Non-Exclusive Mortgage Loan at a mortgage lead providing company. As hers is a Non Exclusive Mortgage Lead, the lead provider sends her lead to several loan officers and these people get in touch with her. As the loan officers increase, competition becomes stiffer. It is much like the difference between one person spending $100 and several people sharing the same $100.
In other words, in Non-Exclusive Leads, the chance of Maggie's bargaining with loan officers and getting the best deal is very bright. Though there is a basic difference between Exclusive and Non-Exclusive Mortgage Leads, in terms of confidentiality and competition, the mode of transfer of information from the Borrower to the Lender, through the Broker or otherwise, at the Lead Provider's Office or Online, face-to-face or telephonic, is a different matter that concerns speed.
Non Exclusive Mortgage Leads are less expensive for the lender to buy, but the competition is higher. This means that the lender has less choice dealing with Non Exclusive Leads than Exclusive Leads. This becomes the plus point for the borrower.
Exclusive Mortgage Leads provides detailed information about exclusive mortgage leads, exclusive internet mortgage leads, exclusive telemarketing mortgage leads, exclusive real time mortgage leads and more. Exclusive Mortgage Leads is the sister site of Life Insurance Leads.
Buying Wisconsin real estate is tempting. Housing is very affordable, ranging from less than $35,000 to more than $2 million. No matter what type of home you are looking for, you can find it in Wisconsin. But, before you go out and get your Wisconsin home mortgage loan, there are three things you will want to beware of:
Predatory Lending
Wisconsin recently enacted several consumer protection laws that prevent predatory lending. Unfortunately, even with these laws in place, unscrupulous lenders still find a way to take advantage of unsuspecting borrowers. If you fear that you are a victim of unfair lending practices, you should contact the Wisconsin Department of Financial Institutions.
Bad Loan Programs
The number of home foreclosures is increasing across the country. Currently, Wisconsin ranks 31st among other states in pending foreclosures. Many of these homeowners found themselves in trouble because of adjustable rate mortgages and bad loan choices. To make sure you don't fall victim to the foreclosure trap, it is very important to find a home mortgage loan program that matches your current and future financial situation. There are plenty of Wisconsin home loans to choose from. Take your time and find the right one.
Your Credit History
Your credit history can really come back to bite you when you're looking for a loan. Though you can still get approved with bad credit, you will be forced to pay higher interest rates and lending fees. If you're planning on applying for a mortgage loan, do your best to get your credit cleaned up. The better your score is, the less your home will cost you.
Visit Wisconsin Lending Center [http://www.wisconsinlendingcenter.com] for a list of Recommended Wisconsin Home Mortgage Lenders [http://www.wisconsinlendingcenter.com/mortgage-lenders/], whether you are looking for home purchase, refinance or a home equity loan.
Predatory Lending
Wisconsin recently enacted several consumer protection laws that prevent predatory lending. Unfortunately, even with these laws in place, unscrupulous lenders still find a way to take advantage of unsuspecting borrowers. If you fear that you are a victim of unfair lending practices, you should contact the Wisconsin Department of Financial Institutions.
Bad Loan Programs
The number of home foreclosures is increasing across the country. Currently, Wisconsin ranks 31st among other states in pending foreclosures. Many of these homeowners found themselves in trouble because of adjustable rate mortgages and bad loan choices. To make sure you don't fall victim to the foreclosure trap, it is very important to find a home mortgage loan program that matches your current and future financial situation. There are plenty of Wisconsin home loans to choose from. Take your time and find the right one.
Your Credit History
Your credit history can really come back to bite you when you're looking for a loan. Though you can still get approved with bad credit, you will be forced to pay higher interest rates and lending fees. If you're planning on applying for a mortgage loan, do your best to get your credit cleaned up. The better your score is, the less your home will cost you.
Visit Wisconsin Lending Center [http://www.wisconsinlendingcenter.com] for a list of Recommended Wisconsin Home Mortgage Lenders [http://www.wisconsinlendingcenter.com/mortgage-lenders/], whether you are looking for home purchase, refinance or a home equity loan.
When seniors think of the reverse mortgage loans, the main issues are not the loans, but the needs, which seniors have. The needs should dictate, how seniors will organize their financial situations and whether the reverse mortgage loans fit to these plans and if yes, for which purposes they will be used.
1. You Can Decide How The Lender Will Pay You.
The targets of the reverse mortgage loans are to offer help to seniors in financial issues. The money for these needs comes from the equities of their own homes, so it is their money. Seniors can decide, whether they want the money paid as lump sums, as monthly payments, as credit lines or even as combinations of all these.
For instance, if the need is to buy a home for a child, to make a home repair and to get cash for the increased medical bills, a senior can take a part of the loan as a lump sum and a part as monthly payments. If he has no specific idea of the needs, but he is sure he needs the money, he can take a part as a credit line.
2. Seniors Can Use The Reverse Mortgage Loans To Buy New Homes.
When the children have moved away and the homes feel too big, seniors can use the reverse mortgage loans for downsizing their homes. They can buy new smaller homes. In January 2009 a new rule came effective, which orders that the appraised value is used as a bases for the loan and not the sales price.
3. Reverse Mortgage Loans Are Tax Free.
The tax free income is always nice to get, especially when you are a senior and in the need of the cash money. Everything, what the lender will pay you, all incomes, are tax free. This is one of the nicest benefits. The reason is natural. You have paid the taxes, when you earned the money to pay your mortgage.
4. A Senior Will Never Owe More Than The Value Of His Home.
This is a very important fact, a kind of a safe factor. The system takes care that the other assets of the borrower will never be used... This also means, that if the borrower has no other assets, he can still get the reverse mortgage loan. And the borrower can never owe more than the value of the equity of his home.
In many cases these loans are not the best options. This is the reason, for instance, why it is very important to go and meet the counselor. He is an expert and can tell, what is a healthy alternative for your special needs.
1. You Can Decide How The Lender Will Pay You.
The targets of the reverse mortgage loans are to offer help to seniors in financial issues. The money for these needs comes from the equities of their own homes, so it is their money. Seniors can decide, whether they want the money paid as lump sums, as monthly payments, as credit lines or even as combinations of all these.
For instance, if the need is to buy a home for a child, to make a home repair and to get cash for the increased medical bills, a senior can take a part of the loan as a lump sum and a part as monthly payments. If he has no specific idea of the needs, but he is sure he needs the money, he can take a part as a credit line.
2. Seniors Can Use The Reverse Mortgage Loans To Buy New Homes.
When the children have moved away and the homes feel too big, seniors can use the reverse mortgage loans for downsizing their homes. They can buy new smaller homes. In January 2009 a new rule came effective, which orders that the appraised value is used as a bases for the loan and not the sales price.
3. Reverse Mortgage Loans Are Tax Free.
The tax free income is always nice to get, especially when you are a senior and in the need of the cash money. Everything, what the lender will pay you, all incomes, are tax free. This is one of the nicest benefits. The reason is natural. You have paid the taxes, when you earned the money to pay your mortgage.
4. A Senior Will Never Owe More Than The Value Of His Home.
This is a very important fact, a kind of a safe factor. The system takes care that the other assets of the borrower will never be used... This also means, that if the borrower has no other assets, he can still get the reverse mortgage loan. And the borrower can never owe more than the value of the equity of his home.
In many cases these loans are not the best options. This is the reason, for instance, why it is very important to go and meet the counselor. He is an expert and can tell, what is a healthy alternative for your special needs.
There are a few clever ways that a reverse mortgage works. These loans are different from regular loans and may have some advantages associated with them. What is a reverse mortgage may be a question that a homeowner has. Finding out exactly how these types of loans work and how they could help someone, may provide the information that is needed. When applying for this type of mortgage, customers may have to provide certain information and follow a set of rules in order to qualify.
The age requirement of the borrow may have to be over a certain amount. This age is crucial in order to get approved for the process. The age and the amount owning on the home will be factors in the approval process. The home will need to be paid off in full or have a low amount owing on it in order to meet the approval process.
With a typical loan or second mortgage, the lender will take a look at the debt ratio of the buyer. They will factor in the income and the debt and then use that against the home. They will also charge monthly fees to help pay for the second mortgage. A reverse system works in a different way.
When someone signs up with a reverse process, they do not have to make any monthly payments. The only time that payments are made, is when the home is sold or the owner of the house passes away. In the event of a death or a sale of the unit, the money that is owed to the lender plus interest and fees are collected at the time. If the house is going to a family member in an inheritance, whatever funds are left over from the reverse mortgage would then be given out to family members.
The unit that is being placed in the reverse process, has to be a single family house that is being occupied by the owner. The person who owns the house may also have to live in for a certain amount of time during the year. That means if a person were to head into a nursing home, they could loose the qualifications for the loan.
During the process of the loan, the customer may have some rules to follow. They may have to keep the property up to date and ensure that all repairs are made as needed. The house should not be run down in any way and remain up to its full potential. Taxes need to be paid and the unit has to be occupied by the owner and the principal loan person.
During the time that the home is available and the owner is alive and well, there is no money that needs to be paid back. That can help someone free up some cash to help pay for things, without having to worry about having to pay it back in monthly bills.
What is a reverse mortgage could be a question that many people may be wondering about. These reverse loans could be paid out using a few different systems. They could be given out as a lump sum or paid out in monthly installments. The extra money can help a senior pay for some of the things that they would like while they are well and living in a paid off house.
The age requirement of the borrow may have to be over a certain amount. This age is crucial in order to get approved for the process. The age and the amount owning on the home will be factors in the approval process. The home will need to be paid off in full or have a low amount owing on it in order to meet the approval process.
With a typical loan or second mortgage, the lender will take a look at the debt ratio of the buyer. They will factor in the income and the debt and then use that against the home. They will also charge monthly fees to help pay for the second mortgage. A reverse system works in a different way.
When someone signs up with a reverse process, they do not have to make any monthly payments. The only time that payments are made, is when the home is sold or the owner of the house passes away. In the event of a death or a sale of the unit, the money that is owed to the lender plus interest and fees are collected at the time. If the house is going to a family member in an inheritance, whatever funds are left over from the reverse mortgage would then be given out to family members.
The unit that is being placed in the reverse process, has to be a single family house that is being occupied by the owner. The person who owns the house may also have to live in for a certain amount of time during the year. That means if a person were to head into a nursing home, they could loose the qualifications for the loan.
During the process of the loan, the customer may have some rules to follow. They may have to keep the property up to date and ensure that all repairs are made as needed. The house should not be run down in any way and remain up to its full potential. Taxes need to be paid and the unit has to be occupied by the owner and the principal loan person.
During the time that the home is available and the owner is alive and well, there is no money that needs to be paid back. That can help someone free up some cash to help pay for things, without having to worry about having to pay it back in monthly bills.
What is a reverse mortgage could be a question that many people may be wondering about. These reverse loans could be paid out using a few different systems. They could be given out as a lump sum or paid out in monthly installments. The extra money can help a senior pay for some of the things that they would like while they are well and living in a paid off house.
It can often be quite difficult for many senior citizens who are living on fixed incomes to be able to meet their monthly bills. In addition, due to their age, it can be even more difficult to get a loan to help with expenses, because lenders are worried that seniors have failing health and may not be able to repay loans. Well, a loan has been created with senior citizens in mind, and only senior citizens. This loan is called a reverse mortgage, and it can be a lifesaver for many people who feel like they are never going to be able to enjoy their retirement because they do not have enough money to do so.
Changes in Reverse Mortgage Rules
There are all kinds of new things going on in the world of reverse mortgages. On December 1, 2009, the FHA raised the mortgage limit on a reverse mortgage to $625,500. This is money that you will never have to pay back as long as you are living in your home, which will be a great help to you, whether you are trying to pay bills, or want to travel and enjoy your retirement.
2009 was a big year for the reverse mortgage industry. An announcement was made in April about a certified Reverse Mortgage Calculator professional-loan originator destination, which is going to protect home owners more than they already are. More and more is being done every day to make reverse mortgages a viable option for any senior citizen who owns their own home and wants to have some additional income to live on.
Start Living Today
If you are senior citizen who owns their own home, you need to look into getting a reverse mortgage. Now is the time of your life that you have the freedom to do whatever you want, but you won't be able to do much if you do not have the financial freedom as well. Having a reverse mortgage will give you the financial freedom you need to enjoy life, and your retirement, to the fullest. Depending on the age and condition of your home, the amount of money you can receive from a reverse mortgage will vary. And, there are some properties that do not qualify for reverse mortgage funding. You can ask your mortgage officer about this, and find out if your home is eligible for a reverse mortgage.
Once you have received your loan, you are free to do pretty much whatever you want with the money. Of course, if you have a mortgage on the house already, you will have to pay this off first with the funds from the Reverse Mortgage Guide, and then you can have the rest for yourself. If you do not have a mortgage, the money is all yours and you can choose to have it all at once, or to receive it in regular payments.
Getting a reverse mortgage means getting financial freedom for yourself for your retirement years. This way, you will not have to worry about not having enough money to meet your monthly bills, and, you may even have some extra money to do the things you have always wanted to.
Changes in Reverse Mortgage Rules
There are all kinds of new things going on in the world of reverse mortgages. On December 1, 2009, the FHA raised the mortgage limit on a reverse mortgage to $625,500. This is money that you will never have to pay back as long as you are living in your home, which will be a great help to you, whether you are trying to pay bills, or want to travel and enjoy your retirement.
2009 was a big year for the reverse mortgage industry. An announcement was made in April about a certified Reverse Mortgage Calculator professional-loan originator destination, which is going to protect home owners more than they already are. More and more is being done every day to make reverse mortgages a viable option for any senior citizen who owns their own home and wants to have some additional income to live on.
Start Living Today
If you are senior citizen who owns their own home, you need to look into getting a reverse mortgage. Now is the time of your life that you have the freedom to do whatever you want, but you won't be able to do much if you do not have the financial freedom as well. Having a reverse mortgage will give you the financial freedom you need to enjoy life, and your retirement, to the fullest. Depending on the age and condition of your home, the amount of money you can receive from a reverse mortgage will vary. And, there are some properties that do not qualify for reverse mortgage funding. You can ask your mortgage officer about this, and find out if your home is eligible for a reverse mortgage.
Once you have received your loan, you are free to do pretty much whatever you want with the money. Of course, if you have a mortgage on the house already, you will have to pay this off first with the funds from the Reverse Mortgage Guide, and then you can have the rest for yourself. If you do not have a mortgage, the money is all yours and you can choose to have it all at once, or to receive it in regular payments.
Getting a reverse mortgage means getting financial freedom for yourself for your retirement years. This way, you will not have to worry about not having enough money to meet your monthly bills, and, you may even have some extra money to do the things you have always wanted to.
Your home can never be completely done. There are always few improvements that you would like to make at all times. There are always things breaking that will require fixing etc. at such times you may not always have the money to pay for these changes and touches. A second mortgage loan maybe the best option to use at such times. A second home mortgage is a practice in which you draw up another loan from a bank mortgaging the same property that you had while getting your first loan.
In most cases while drawing up a second mortgage on your home you have given it thorough thought and have almost paid off your initial loan. The second loan describes that your home takes priority in case you are not able to pay off the money borrowed.
The rate of interest on the second mortgage loan is higher than one that is new because it is a riskier situation to be in from the perspective of the bank. While deciding to go in for a second loan always chose reputed banks which have fixed rates. Always read the fine prints on the document thoroughly before you sign it. If possible always get it checked up by a lawyer. Make sure that the bank you are approaching does not have an extremely high processing and application fee. Hence you must do a lot of research and finding out before you zero down on one bank. Speak to family and neighbors for more recommendations.
Some loans can be stretched for a twenty year period with smaller monthly repayments; however it suits your pocket. Once you have taken the loan remember why you have the borrowed the money and use it for that purpose alone. Do not arbitrarily go about using the extra money on other unnecessary purchases and forget about the entire purpose of the loan.
Once you have taken the loan remember to only sign out the checks if you are confident of being able to repay such amounts as written on the checks. The bouncing of a check can be dealt with penal codes.
A second mortgage home is a boon for people who want to have much more in life but cannot afford to do so right away. It may take some time and a few sacrifices when you decide to go in for a second mortgage loan but all in all it is an absolutely wonderful option if you really desire more in life!
In most cases while drawing up a second mortgage on your home you have given it thorough thought and have almost paid off your initial loan. The second loan describes that your home takes priority in case you are not able to pay off the money borrowed.
The rate of interest on the second mortgage loan is higher than one that is new because it is a riskier situation to be in from the perspective of the bank. While deciding to go in for a second loan always chose reputed banks which have fixed rates. Always read the fine prints on the document thoroughly before you sign it. If possible always get it checked up by a lawyer. Make sure that the bank you are approaching does not have an extremely high processing and application fee. Hence you must do a lot of research and finding out before you zero down on one bank. Speak to family and neighbors for more recommendations.
Some loans can be stretched for a twenty year period with smaller monthly repayments; however it suits your pocket. Once you have taken the loan remember why you have the borrowed the money and use it for that purpose alone. Do not arbitrarily go about using the extra money on other unnecessary purchases and forget about the entire purpose of the loan.
Once you have taken the loan remember to only sign out the checks if you are confident of being able to repay such amounts as written on the checks. The bouncing of a check can be dealt with penal codes.
A second mortgage home is a boon for people who want to have much more in life but cannot afford to do so right away. It may take some time and a few sacrifices when you decide to go in for a second mortgage loan but all in all it is an absolutely wonderful option if you really desire more in life!
Mortgage rates in any market typically vary weekly or even daily. For the month of October 2005, interest rates for a 30-year fixed rate mortgage averaged slightly below six percent, which is comparable to the national average for the same period. Average interest rates for a one-year adjustable rate mortgage were slightly below four percent.
There are several factors that may affect your mortgage rate. In general, the more you borrow and the longer the term, the higher the rate. If you have a good credit history, a monthly income greatly in excess of your expected monthly payment, and are able to make a larger down payment, these factors can all drive the rate on your mortgage down. Rates on adjustable rate mortgages increase or decrease as interest rates increase or decrease, respectively. Your mortgage broker's points can also affect your rate. Points are basically broker's fees, with one point being equivalent to one percentage point of the total value of the loan. If a broker is paid more points upfront, in general, you will pay less interest for the life of the loan.
It is a good idea to clarify exactly how brokerage fees are structured. Closing costs are paid by the lender and built into the mortgage in the form of higher interest rates. You should find out what rate reductions may apply if you pay some or all of the closing costs upfront.
Trends in the yield of the 10-year Treasury note are usually a good predictor for rates of 30-year fixed rate mortgages, because most 30-year fixed rate mortgages end up being paid off or refinanced in about 10 years and are therefore somewhat similar to the 10-year note.
Florida Mortgages provides detailed information about Florida mortgages, Florida interest only mortgages, Florida mortgage brokers and more. Florida Mortgages is affiliated with Florida Refinance Mortgage Loans.
There are several factors that may affect your mortgage rate. In general, the more you borrow and the longer the term, the higher the rate. If you have a good credit history, a monthly income greatly in excess of your expected monthly payment, and are able to make a larger down payment, these factors can all drive the rate on your mortgage down. Rates on adjustable rate mortgages increase or decrease as interest rates increase or decrease, respectively. Your mortgage broker's points can also affect your rate. Points are basically broker's fees, with one point being equivalent to one percentage point of the total value of the loan. If a broker is paid more points upfront, in general, you will pay less interest for the life of the loan.
It is a good idea to clarify exactly how brokerage fees are structured. Closing costs are paid by the lender and built into the mortgage in the form of higher interest rates. You should find out what rate reductions may apply if you pay some or all of the closing costs upfront.
Trends in the yield of the 10-year Treasury note are usually a good predictor for rates of 30-year fixed rate mortgages, because most 30-year fixed rate mortgages end up being paid off or refinanced in about 10 years and are therefore somewhat similar to the 10-year note.
Florida Mortgages provides detailed information about Florida mortgages, Florida interest only mortgages, Florida mortgage brokers and more. Florida Mortgages is affiliated with Florida Refinance Mortgage Loans.
Florida is a dreamland for a borrower as well as a moneylender. The borrower will get the best rates while the moneylender will get the best business. The real-estate boom means that mortgage companies are flourishing.
Mortgage rates in Florida are the best available. There are different types of mortgages that you can choose. The different types of mortgage loans available in Florida are: FHA (Federal Housing Administration) loans, consolidation loans, land loans, conventional loans, balloon loans and refinance mortgage loans.
The most popular mortgage type in Florida is the fixed-rate loan. Generally, these loans have a term of 15 or 30 years. The ARM (adjustable rate mortgage) loans are also gaining popularity. Other loan types are the hard equity loans, interest only loans, 100% cash out refinance, construction loans, commercial mortgage loans, farmers home loans, no PMI (Private Mortgage Insurance) loans, vacant land and acreage mortgage loans.
The other types include the commercial mortgage loan taken for the commercial purposes, and the interest-only loan. The commercial mortgages are similar to ordinary mortgage loans but they are easy to get and also have a uniform rate whether you take it for a small business or a big business.
Interest-only loans allow you to pay back only the interest for some time, usually up to five years, and then you can pay the principal along with the interest. Most of the interest-only mortgages have adjustable rates, so there is a chance of paying more interest rates in the future.
Florida has some of the lowest refinancing rates on the market. So if you wish to refinance your home mortgage, a Florida lender is the best option. You can look for the best rates on the Internet.
Florida Mortgage Rates provides detailed information on Florida Mortgage Rates, Florida Mortgage Rate Refinance, Florida Mortgage Interest Rates, Best Mortgage Rates In Florida and more. Florida Mortgage Rates is affiliated with Florida Interest Only Mortgages
Mortgage rates in Florida are the best available. There are different types of mortgages that you can choose. The different types of mortgage loans available in Florida are: FHA (Federal Housing Administration) loans, consolidation loans, land loans, conventional loans, balloon loans and refinance mortgage loans.
The most popular mortgage type in Florida is the fixed-rate loan. Generally, these loans have a term of 15 or 30 years. The ARM (adjustable rate mortgage) loans are also gaining popularity. Other loan types are the hard equity loans, interest only loans, 100% cash out refinance, construction loans, commercial mortgage loans, farmers home loans, no PMI (Private Mortgage Insurance) loans, vacant land and acreage mortgage loans.
The other types include the commercial mortgage loan taken for the commercial purposes, and the interest-only loan. The commercial mortgages are similar to ordinary mortgage loans but they are easy to get and also have a uniform rate whether you take it for a small business or a big business.
Interest-only loans allow you to pay back only the interest for some time, usually up to five years, and then you can pay the principal along with the interest. Most of the interest-only mortgages have adjustable rates, so there is a chance of paying more interest rates in the future.
Florida has some of the lowest refinancing rates on the market. So if you wish to refinance your home mortgage, a Florida lender is the best option. You can look for the best rates on the Internet.
Florida Mortgage Rates provides detailed information on Florida Mortgage Rates, Florida Mortgage Rate Refinance, Florida Mortgage Interest Rates, Best Mortgage Rates In Florida and more. Florida Mortgage Rates is affiliated with Florida Interest Only Mortgages
Over the past decade franchised mortgage brokers have experienced boom times. Mortgage Choice, RAMS, Wizard and others expanded to meet the demand for credit from the proliferation of non-bank credit providers; until recently. There's no escaping the brutal reality of the credit crisis: it's hitting the non bank sector hardest.
According to the Mortgage & Finance Association of Australia (MFAA) the market share of non bank mortgage originators has declined from a peak of 15 per cent to about 4 per cent; effectively bringing an abrupt halt to the trend from the late 1990s. The appeal of buying into a branded, non bank franchise may be waning.
Mortgage brokers often work in what are referred to as a franchise environment. This is distinct from a being an "independent". A franchisor has a lot of controls placed on the mortgage brokers. Consumers do trust brands but the franchisees are disadvantaged by not being able to operate freely in their markets. Commission structures are often stacked in favour of the franchise group; the agreement terms are onerous.
The promises made to mortgage brokers who seek to take buy a franchise or to work within a franchise environment is that leads will be provided. Mortgage brokers however, thrive on good quality leads. More often than not however, the quality of leads is minimal. They are usually web-generated and often when you follow them up they don't know why you are calling.
Other mortgage brokers join "aggregator" groups. In the market as it stands today, mortgage brokers need to be "approved" by banks before making mortgage applications on behalf of clients. Independent brokers need to achieve volume hurdles to get access to banks and other lenders. These groups manage a lot of the compliance, professional indemnity and training services and enable smaller firms to gain access.
It is useful to understand that many experienced brokers won't go into franchises; they don't need the training. On the other hand, franchising is a resilient business model and offers many small businesses stability, systems, buying power and brand strength that could give them an edge over independent retailers and service businesses.
Regarding the issue of constraints on franchisees who need flexibility in a tough market, there's the challenge of large and expensive centralised systems and the issue writ large of relevance in an industry that's undergoing change.
The industry has attracted those with an entrepreneurial flair in the past and will continue to do so into the future. When banks were closing branches in the 1990s, people with entrepreneurial flair came into the industry. They were consumer centric and filled the void left by the banks. Some very successful franchise systems were created; others became independent brokers.
The bottom line remains the same: if you're providing a high level of customer service you'll get business. It's the one-on-one interaction that consumers want. The response to the recent Great Financial Crisis is that consolidation is inevitable. Even at the smaller end independent brokers are merging with other brokers. Despite the upheaval, brokers have retained their share of total business. They still are holding 40 per cent; a healthy share. It shows that consumers like dealing with them. Current circumstances give brokers more opportunities than less, to capture business. Customers want the comfort that they are making the right decision.
According to the Mortgage & Finance Association of Australia (MFAA) the market share of non bank mortgage originators has declined from a peak of 15 per cent to about 4 per cent; effectively bringing an abrupt halt to the trend from the late 1990s. The appeal of buying into a branded, non bank franchise may be waning.
Mortgage brokers often work in what are referred to as a franchise environment. This is distinct from a being an "independent". A franchisor has a lot of controls placed on the mortgage brokers. Consumers do trust brands but the franchisees are disadvantaged by not being able to operate freely in their markets. Commission structures are often stacked in favour of the franchise group; the agreement terms are onerous.
The promises made to mortgage brokers who seek to take buy a franchise or to work within a franchise environment is that leads will be provided. Mortgage brokers however, thrive on good quality leads. More often than not however, the quality of leads is minimal. They are usually web-generated and often when you follow them up they don't know why you are calling.
Other mortgage brokers join "aggregator" groups. In the market as it stands today, mortgage brokers need to be "approved" by banks before making mortgage applications on behalf of clients. Independent brokers need to achieve volume hurdles to get access to banks and other lenders. These groups manage a lot of the compliance, professional indemnity and training services and enable smaller firms to gain access.
It is useful to understand that many experienced brokers won't go into franchises; they don't need the training. On the other hand, franchising is a resilient business model and offers many small businesses stability, systems, buying power and brand strength that could give them an edge over independent retailers and service businesses.
Regarding the issue of constraints on franchisees who need flexibility in a tough market, there's the challenge of large and expensive centralised systems and the issue writ large of relevance in an industry that's undergoing change.
The industry has attracted those with an entrepreneurial flair in the past and will continue to do so into the future. When banks were closing branches in the 1990s, people with entrepreneurial flair came into the industry. They were consumer centric and filled the void left by the banks. Some very successful franchise systems were created; others became independent brokers.
The bottom line remains the same: if you're providing a high level of customer service you'll get business. It's the one-on-one interaction that consumers want. The response to the recent Great Financial Crisis is that consolidation is inevitable. Even at the smaller end independent brokers are merging with other brokers. Despite the upheaval, brokers have retained their share of total business. They still are holding 40 per cent; a healthy share. It shows that consumers like dealing with them. Current circumstances give brokers more opportunities than less, to capture business. Customers want the comfort that they are making the right decision.
A mortgage broker works as an intermediary between the mortgage lender and the applicant. They usually have access to the whole market and are able to offer the best deal to suit your needs.
Unlike a tied or single lender, brokers have access to a wide range of products and can pick the best ones to offer you based on your circumstances. The best mortgage for you is likely to be different to the next applicant, based on credit history, personal circumstances, deposit, debt, and many other factor which affect who will lend to you and how much institutions may choose to lend you.
Mortgage brokers work with applicant to determine an achievable goal, then 'shop around' for the best deal available to the applicant. The best broker to use is one with whole market access. Those who are multi-tied to a handful of lenders will only be able to offer you mortgage deals specifically from those lenders, no others, If your broker has access to the whole of the mortgage market then you stand to find the best fit mortgage for your circumstances.
Mortgage brokers should be unbiased, so you are assured of the best deal for you, not the best deal for them. Occasionally a broker who has a good and/or regular relationship with specific lenders may be offered a preferential rate, as mortgage companies compete for business.
Mortgage brokers can be paid in one of two ways. An independent mortgage advisers they can be paid directly by the mortgage lender upon completion of the mortgage, or the applicant can pay the mortgage broker and they will refund it to you when the lender pays out.
Mortgage brokers can be used in any mortgage situation. They are a great place to start if you are a first time buyer as they can explain all options in detail and as the voice of experience will be able to help you decide the best way forward for your house buying plans. Mortgage brokers can also be used by those moving home, and those planning to re-mortgage. As independent advisors they are also experts in buy to let and let to buy, and can help those with bad credit try to find a mortgage.
All UK brokers should be regulated by the FSA (Financial Services Authority) or must be agents for authorised firms. If your broker cannot prove that they are either of these things, walk away. The FSA was set up to protect the rights of the individual and regulate financial services. It requires firms to be competent in their trade, financially sound, and provide good customer service. If your broker is not part of the FSA you are putting yourself at risk, and may not have access to compensation and complaints procedures.
When looking for advice on mortgages it makes sense to visit a mortgage broker for expert advice. Be sure to research the mortgage brokers in your area, and arrange to visit at least 2 of them to get a full picture of the mortgages which you may be offered. They will also be able to help with paperwork and take over a large part of the arrangements for you.
Philip Loughran writes on a number of subjects from travel to law, automotive to education. For mortgage services in Southampton and mortgage broker Southampton he recommends Choice Financial Solutions.
Unlike a tied or single lender, brokers have access to a wide range of products and can pick the best ones to offer you based on your circumstances. The best mortgage for you is likely to be different to the next applicant, based on credit history, personal circumstances, deposit, debt, and many other factor which affect who will lend to you and how much institutions may choose to lend you.
Mortgage brokers work with applicant to determine an achievable goal, then 'shop around' for the best deal available to the applicant. The best broker to use is one with whole market access. Those who are multi-tied to a handful of lenders will only be able to offer you mortgage deals specifically from those lenders, no others, If your broker has access to the whole of the mortgage market then you stand to find the best fit mortgage for your circumstances.
Mortgage brokers should be unbiased, so you are assured of the best deal for you, not the best deal for them. Occasionally a broker who has a good and/or regular relationship with specific lenders may be offered a preferential rate, as mortgage companies compete for business.
Mortgage brokers can be paid in one of two ways. An independent mortgage advisers they can be paid directly by the mortgage lender upon completion of the mortgage, or the applicant can pay the mortgage broker and they will refund it to you when the lender pays out.
Mortgage brokers can be used in any mortgage situation. They are a great place to start if you are a first time buyer as they can explain all options in detail and as the voice of experience will be able to help you decide the best way forward for your house buying plans. Mortgage brokers can also be used by those moving home, and those planning to re-mortgage. As independent advisors they are also experts in buy to let and let to buy, and can help those with bad credit try to find a mortgage.
All UK brokers should be regulated by the FSA (Financial Services Authority) or must be agents for authorised firms. If your broker cannot prove that they are either of these things, walk away. The FSA was set up to protect the rights of the individual and regulate financial services. It requires firms to be competent in their trade, financially sound, and provide good customer service. If your broker is not part of the FSA you are putting yourself at risk, and may not have access to compensation and complaints procedures.
When looking for advice on mortgages it makes sense to visit a mortgage broker for expert advice. Be sure to research the mortgage brokers in your area, and arrange to visit at least 2 of them to get a full picture of the mortgages which you may be offered. They will also be able to help with paperwork and take over a large part of the arrangements for you.
Philip Loughran writes on a number of subjects from travel to law, automotive to education. For mortgage services in Southampton and mortgage broker Southampton he recommends Choice Financial Solutions.
With all these options available the good news is that you can find the correct mortgage for you. However this improved choice can seem bewildering and you may miss out on the best option for you through confusion, lack of time or simply having too many choices.In this competitive market it has never been more important to get clear, concise and simple independent advice to help you make the right choice.This guide is designed to help explain some of the options available to you and to let you know how a mortgage broker can make sure that one of the most important choices of your life is the correct one for you.
The Mortgage ProcessWhat is a mortgage?
A mortgage is made up of two parts:The Capital -
This is the amount of money that is borrowed from the lender to purchase the property.The Interest -
This is the interest that the lender charges on the capital until it is repaid at the end of the mortgage term.
Types of MortgageRepayment mortgageEach month your payment to the lender repays some capital and some of the interest. As long as you maintain your payments you can be certain that your mortgage will be repaid at the end of the term.Advantages
As long as the monthly payments are maintained the mortgage will be repaid at the end of the term - no need to worry about investment returns
Ideal if you wish to limit the risk linked to your mortgage
Simple to understand with payments to one providerDisadvantages
No possibility of additional investment returns
If you move house frequently it is difficult to build up equity in the property in the early years, as early payments are mainly interest
Limited possibility of repaying the loan early without increasing monthly payments
Interest only mortgageEach month the payment to the lender repays the interest on the loan. In this way the amount that is owed to the lender remains the same throughout the mortgage term. At the end of the mortgage term the lender will require the original amount of the loan to be repaid. A separate savings vehicle is used to build up enough money to repay the loan.Commonly used savings vehicles are:
Endowments (With profits)
PEPs (Pre April 1999)
ISAs (Post April 1999)
PensionsAdvantages
Offers the potential for additional investment return at the end of the term or the ability to repay the loan early, subject to investment return
The savings vehicle is usually portable when you move house
Choice of a wide range of investments that can be tailored to meet individual needs
Easy to move the mortgage without disrupting the repayment planDisadvantages
The ability to repay the loan is dependent upon the investment performance of the savings vehicle
You are responsible for the repayment of the loan at the end of the term
Two separate payments to track. One to the lender and another to the investment company
'Mix & Match'Many people moving house may already have an endowment plan from their previous loan. Their circumstances may have changed, however, so an additional endowment would not be appropriate for them. In these circumstances, it is usually possible to arrange for a lender to set up part of a loan on an interest only basis, and part on a repayment basis, thus ensuring that the benefits already accrued under the endowment are not lost. Not only that, but the life assurance already provided under the endowment is not lost.This method is becoming increasingly popular for people moving on to their next house.
Endowment Mortgages (With Profit)This type of investment combines a savings vehicle with the life protection needed to repay the loan on death during the term.Bonuses are usually, but not guaranteed to be added to the plan on a yearly basis and once paid these cannot be taken away.In this way the endowment aims to provide steady growth over the mortgage term and provide a lump sum, which should allow you to repay the loan although this cannot be guaranteed and is dependent on investment performance.Advantages
Guarantees to repay the loan in the event of death during the term
Portable and can be moved from mortgage to mortgage
Once bonuses are added they cannot be taken away
Potential for additional returns
Potential to repay the mortgage early
Can combine savings plan with life and critical illness protection if requiredDisadvantages
If surrendered early the return may be less than the premiums paid
No flexibility in premium payments
Term should be for at least 15 years
No guarantee that the mortgage will be repaid. The return is based wholly on the investment performance of the chosen provider
Must have life cover built in whether required or not
A Market Value Reduction (MVR) could apply to your endowment (if with profits) in adverse market conditionsA Market Value Reduction is a reduction applied to unitised with-profits funds where the value of the underlying assets is low. The Market Value Reduction, if any, is applied only when the plan is fully or partially surrendered (for example, on early retirement or transfer to another plan) or units switched into another fund.
ISA MortgageAn ISA (Individual Saving Account) is a very flexible way of saving to repay your mortgage. They do not have a set investment term and contributions may be varied (usually subject to maximum and minimum limits). You can pay on a regular monthly basis as well as making lump sum payments into the plan as long as you remain within the maximum annual limit.They offer a wide range of investment choices and also have several tax advantages.Additional protection such as Life or Critical Illness cover is usually purchased separately.Advantages
Tax efficient savings
No specific term
Potential to repay the loan early
Potential for additional investment return
Flexible premium payments
Portable - can be moved with your mortgageDisadvantages
Separate protection plan(s) required
Return is reliant on investment performance
No guarantee of return
Can only be taken in single name
Pension MortgageThis aims to take advantage of the tax free cash that is available from a personal pension plan. As this involves pension planning as well as mortgage planning it can be a very complicated area to consider.As with all the other options highlighted, there are advantages and disadvantages, however due to the complex nature of Pension Mortgages they should be dealt with on an individual basis and independent advice should be sought.
Hanson Wealth Management are a UK based Independent Financial Adviser. Hanson are the only Mortgage Brokers endorsed by the Police Federation of England and Wales to provide Police Mortgage Quotes
The Mortgage ProcessWhat is a mortgage?
A mortgage is made up of two parts:The Capital -
This is the amount of money that is borrowed from the lender to purchase the property.The Interest -
This is the interest that the lender charges on the capital until it is repaid at the end of the mortgage term.
Types of MortgageRepayment mortgageEach month your payment to the lender repays some capital and some of the interest. As long as you maintain your payments you can be certain that your mortgage will be repaid at the end of the term.Advantages
As long as the monthly payments are maintained the mortgage will be repaid at the end of the term - no need to worry about investment returns
Ideal if you wish to limit the risk linked to your mortgage
Simple to understand with payments to one providerDisadvantages
No possibility of additional investment returns
If you move house frequently it is difficult to build up equity in the property in the early years, as early payments are mainly interest
Limited possibility of repaying the loan early without increasing monthly payments
Interest only mortgageEach month the payment to the lender repays the interest on the loan. In this way the amount that is owed to the lender remains the same throughout the mortgage term. At the end of the mortgage term the lender will require the original amount of the loan to be repaid. A separate savings vehicle is used to build up enough money to repay the loan.Commonly used savings vehicles are:
Endowments (With profits)
PEPs (Pre April 1999)
ISAs (Post April 1999)
PensionsAdvantages
Offers the potential for additional investment return at the end of the term or the ability to repay the loan early, subject to investment return
The savings vehicle is usually portable when you move house
Choice of a wide range of investments that can be tailored to meet individual needs
Easy to move the mortgage without disrupting the repayment planDisadvantages
The ability to repay the loan is dependent upon the investment performance of the savings vehicle
You are responsible for the repayment of the loan at the end of the term
Two separate payments to track. One to the lender and another to the investment company
'Mix & Match'Many people moving house may already have an endowment plan from their previous loan. Their circumstances may have changed, however, so an additional endowment would not be appropriate for them. In these circumstances, it is usually possible to arrange for a lender to set up part of a loan on an interest only basis, and part on a repayment basis, thus ensuring that the benefits already accrued under the endowment are not lost. Not only that, but the life assurance already provided under the endowment is not lost.This method is becoming increasingly popular for people moving on to their next house.
Endowment Mortgages (With Profit)This type of investment combines a savings vehicle with the life protection needed to repay the loan on death during the term.Bonuses are usually, but not guaranteed to be added to the plan on a yearly basis and once paid these cannot be taken away.In this way the endowment aims to provide steady growth over the mortgage term and provide a lump sum, which should allow you to repay the loan although this cannot be guaranteed and is dependent on investment performance.Advantages
Guarantees to repay the loan in the event of death during the term
Portable and can be moved from mortgage to mortgage
Once bonuses are added they cannot be taken away
Potential for additional returns
Potential to repay the mortgage early
Can combine savings plan with life and critical illness protection if requiredDisadvantages
If surrendered early the return may be less than the premiums paid
No flexibility in premium payments
Term should be for at least 15 years
No guarantee that the mortgage will be repaid. The return is based wholly on the investment performance of the chosen provider
Must have life cover built in whether required or not
A Market Value Reduction (MVR) could apply to your endowment (if with profits) in adverse market conditionsA Market Value Reduction is a reduction applied to unitised with-profits funds where the value of the underlying assets is low. The Market Value Reduction, if any, is applied only when the plan is fully or partially surrendered (for example, on early retirement or transfer to another plan) or units switched into another fund.
ISA MortgageAn ISA (Individual Saving Account) is a very flexible way of saving to repay your mortgage. They do not have a set investment term and contributions may be varied (usually subject to maximum and minimum limits). You can pay on a regular monthly basis as well as making lump sum payments into the plan as long as you remain within the maximum annual limit.They offer a wide range of investment choices and also have several tax advantages.Additional protection such as Life or Critical Illness cover is usually purchased separately.Advantages
Tax efficient savings
No specific term
Potential to repay the loan early
Potential for additional investment return
Flexible premium payments
Portable - can be moved with your mortgageDisadvantages
Separate protection plan(s) required
Return is reliant on investment performance
No guarantee of return
Can only be taken in single name
Pension MortgageThis aims to take advantage of the tax free cash that is available from a personal pension plan. As this involves pension planning as well as mortgage planning it can be a very complicated area to consider.As with all the other options highlighted, there are advantages and disadvantages, however due to the complex nature of Pension Mortgages they should be dealt with on an individual basis and independent advice should be sought.
Hanson Wealth Management are a UK based Independent Financial Adviser. Hanson are the only Mortgage Brokers endorsed by the Police Federation of England and Wales to provide Police Mortgage Quotes