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A New Look For Business In The Future
Multilevel Marketing, commonly called MLM, Network Marketing or direct sales is one of the highest potential income sources anywhere, but particularly on the Internet. It has been claimed that in the last 10 years more people have become...
Book Review: "Frugal Living for Dummies"
Publishing Guidelines: Feel free to publish the following article in its entirety in your ezine, website, or print newsletter. The resource box must be included with an active link. Please send a courtesy copy of the publication in which the...
How Hillary Adams taught her 12-year-old the Concept of "Passive Income"
Money, income, bills, investments, is the sheer thought of them make you want to shriek in disgust, curl up into a prickly ball? What an advantage to those with reliance on advisors of financial savvy, early on in their lives, with the rest of us...
Three Steps to Give Your Strategic Plan Traction
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Views from a Roc
A few days ago I was reading an article about the chances of succeeding online that had me thinking. Did you know that out of every 100 websites probably only about 5 of them will be successful? Most of this can be blamed on the site owners...
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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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