When You Don't Have To Pay Back Your Mortgage
Jenny Lane
A reverse mortgage is a loan that you make where you do not have to pay back anything for as long as you still possess that property you have purchased. Reverse mortgages provide you with cash which you can use for other investments. By turning the value of your home into cash, reverse mortgages gives you virtually unlimited funds without having to move and even without repaying the loan every month.
There are several ways to give you the cash from reverse mortgages. You can get cash from a reverse mortgage all at once or in a single lump sum. With a reverse mortgage, you can also opt to receive a regular monthly cash advance.
In addition, a reverse mortgage can offer you cash as a “creditline” account. This creditline account from a reverse mortgage will let you get the amount of money you want whenever the need arises. And if none of these methods suits you, reverse mortgage cash may be given to you using any combination of the abovementioned methods.
Whether or not you want your cash from a reverse mortgage be paid to you in lump or in installment, the main thing is that you do not have to pay anything back until you die, sell your home, or permanently move. Reverse mortgages usually cater to homeowners who are 62 years old and older.
Reverse Mortgage vs. Other Home Loans
In most other loans, a systematic check on your income and assets is done in order to pre-qualify for the mortgage. This is done as an assurance to the lender that you will be able to afford the monthly payments tied with a loan. Since reverse mortgages do not involve any monthly payments, you not have to go through these tedious prequalification procedures. Qualifying for a reverse mortgage is easy and hassle-free. There is no minimum income required and no monthly repayments. And what’s more, with a reverse mortgage, you do not stand the chance of losing your home.
The downside to a reverse mortgage
In every story, there is always the other side of the coin. While reverse mortgages have their advantages, they also have a downside. As you know already, reverse mortgages do not require monthly paybacks. This means that with reverse mortgages, you are actually taking out equity from your home and turning it into cash. This does not bode well for your debt or your home equity for that matter.
Here’s how it works. Other mortgages require a person to make a down payment when buying a home. As years go on, they use their income to pay back the money they borrowed in making the purchase. This decreases their debt and increases the value of their home.
With a reverse mortgage, everything works in the reverse. You have your home. You convert its value into cash. And then you take out that cash every now and then, thereby increasing your debt and reducing your home equity.
Of course, this is not always the case with reverse mortgages. If your home value grows rapidly or you only one loan on your home, there’s every chance that your equity could increase over time.
About the Author: Jenny Lane is a banking specialist who writes on related financing and banking industry topics. Find out more about the latest in banking industry at http://bankingtrends.com
Source: www.isnare.comThe latest information and news on Mortgages:
Leading Democrat offers mortgage aid bill (Reuters via Yahoo! News)
The second-ranking Democrat of the U.S. Senate on Tuesday introduced legislation that would let bankruptcy judges erase some mortgage debt in an effort to stem foreclosures.
Mortgage-Bond Yields Hit Lows on Speculation of More Fed Buying (Bloomberg)
Jan. 6 (Bloomberg) -- Yields on Fannie Mae , Freddie Mac and Ginnie Mae mortgage bonds fell to record lows, dragged down by their declining spreads relative to government notes after the Federal Reserve began a $500 billion program to buy the bonds.
Mortgage-backed Securities Jump, Signaling Rates To Drop (Fox News)
Mortgage-backed Securities Jump, Signaling Rates To Drop
Mortgage-Bond Spreads Fall Amid Speculation of More Fed Buying (Bloomberg)
Jan. 6 (Bloomberg) -- Yields on Fannie Mae , Freddie Mac and Ginnie Mae mortgage securities tumbled to the lowest since October 2007 relative to government notes, after the Federal Reserve began a $500 billion program to buy the bonds.
Fed to Begin Buying Mortgage-Backed Securities (New York Times)
The Federal Reserve Bank of New York said Monday that it had begun purchasing mortgage-backed securities in an effort to bolster the battered housing market.
Yahoo! News Search Results for refinance
Rushing to refinance: Is it worth it? (WINK TV Southwest Florida)
Right now 30-year, fixed mortgage rates are at a 37-year low, and that has many people looking to save.
Govt to focus on IIFCL refinance (Central Chronicle)
New Delhi, Jan 5: The government will focus on utilisation of refinance facility extended to IIFCL to provide Rs 75,000 crore for the infrastructure sector projects with a view to arrest economic slowdown, Planning Commission Deputy Chairman Montek Singh Ahluwalia said on Monday.
Now is a good time to refinance (Ravalli Republic)
Plunging interest rates over the past month have prompted many homeowners in the Bitterroot Valley to look into refinancing, local lenders say.
Govt to focus on IIFCL refinance to pump in Rs 75k cr (The Hindu)
NEW DELHI: The government will focus on utilisation of refinance facility extended to IIFCL to provide Rs 75,000 crore for the infrastructure sector projects with a view to arrest economic slowdown, Planning Commission Deputy Chairman, Mr Montek Singh Ah luwalia said on Monday.
Govt to focus on IIFCL refinance to pump in Rs 75k cr: Montek (Business Stand...
The government will focus on utilisation of refinance facility extended to India Infrastructure Finance Company (IIFCL) to provide Rs 75,000 crore for the infrastructure sector projects with a view to arrest economic slowdown, Planning Commission Deputy Chairman Montek Singh Ahluwalia said today.