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11 Great Ways to be Positive about Change
Change, as they say, is all around us. And if implemented badly, creates ill-will and a whole raft of negative beliefs about what it means to us. It can fill us with fear and worry. But there are positives you can get out of change. Here are eleven...
3 Strategies to Market Your Business Even When There’s No Money
Many small and home based businesses know they need to market and yet, have little or no money to do so. Sadly, many use this as a reason not to market. Even on a limited budget you can promote and gain visibility for you and your business. The...
Nuts and Bolts of Effective Cover Letters
As a job seeker, you shouldn't overlook the importance of a cover letter. If written strategically, a cover letter increases your chances for consideration, and provides an opportunity to highlight your individuality.
A cover letter is much...
Positioning For Profits
Last Friday, I was spending one last day of freedom with a dear friend who was expecting to have her first baby at any minute. We decided to hang out by the pool. On the way there, we stopped to pick up some lunch to eat pool-side. Given the choice...
Seven Steps to Getting Known - Guerrilla Public Relations for the Entrepreneur
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Reverse Mortgage Explained
Can't remember how many times I've been asked "What is a reverse mortgage"? Reverse mortgages are a great way to get a loan using your primary asset. As in all cases of financial lending, the flexibility comes at a price. A reverse mortgage is a loan using your house and is referred to as a “rising debt, falling equity" kind of deal.
To compare reverse mortgage to a more traditional one, the type of mortgage commonly used when buying a house can be classed as a “forward mortgage”. To qualify for forward mortgage, you must have a steady source of income. Because the mortgage is secured by the asset, if you default on the payments, your house can be taken from you. As you pay off the house, your equity is the difference between the mortgage amount and how much you’ve paid. When the last mortgage payment is made, the house belongs to you.
On the other hand a reverse mortgage process doesn’t require that the applicant have great credit, or even that they have a steady source of income. The major stipulation is that the house is owned by the applicant. Generally, there is also a minimum age required as well, the older the applicant, the higher the loan amount can be. As well, reverse mortgages must be the only debt against your house.
Differing from a conventional “forward mortgage”, your debt increases along with your equity. Instead of making any monthly payments, the amount loaned has interest added to it - which eats away at your equity. If the loan is over a long period of time, when the mortgage comes due, there may be a large amount owed. Furthermore, if the price of your
home decreased, there may not be any equity left over. On the flip side, if it was to increase, this could allow for an equity gain, but this isn’t typical of the marketplace.
When deciding how to draw money from the reverse mortgage, there are a few options; a single lump sum, regular monthly advances, or a credit account. There are conditions in this kind of mortgage that would warrant the immediate repayment of the loan; the mortgage will be due when the borrower dies, sells the house, or moves out.
Failure to pay your property taxes or insurance on the home will undoubtedly lead to a default as well. The lender also has the option of paying for these obligations by reducing your advances to cover the expense. Make sure you read the loan documents carefully to make sure you understand all the conditions that can cause your loan to become due.
Hope this helps clear up the term reverse mortgages.
Ken Chukwell http://www.online-loans-pro.com/
P.S. You have permission to use this article at your website as long as the author's bio lines are included, with the live links pointing to author's website and the article is not altered in any way.
About the Author
Ken Chukwell is a personal finance enthusiast whose website http://www.online-loans-pro.com/ is dedicated to quality information on everything online loans. For indepth information and for all your online loan needs please visit http://www.online-loans-pro.com/
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