Home Equity Conversion Mortgage {Reverse Mortgage} [HECM] - Compare To Home equity line of credit. (HELOCs)
If
you're interested in a home equity loan, be sure to shop around. The home
equity market is extremely competitive. And don't just compare interest rates.
Find out whether a lender will waive the cost of the appraisal and other
charges for such things as credit and title reports.
========
RealEstate Investment to build wealth. Yes buying one single home can and will help
you grow your riches..
Today
many homeowners are sitting on a record amount of cash – and not tapping it.
That happened just because they purchased in the past a piece of real estate
property.
======
A reverse mortgage is an increasingly popular
consumer loan for senior homeowners age 62+. It allows these senior homeowners
to tap into the home equity that has been built up. There are no monthly
mortgage payments but homeowners are still responsible for paying property
taxes, insurance, and maintenance. The repayment of the loan is deferred until
the homeowner dies, sells or moves out of the home.
======
There
are several considerations to make before deciding to proceed with a reverse
mortgage loan. As with any large decision, it’s helpful to have an
understanding of the pros and cons associated. Some of them include:
Pros:
You continue to live in your home and
retain title to your home as long as you continue to pay your property taxes,
insurance, and maintenance.
You generally receive the proceeds of the
loan as tax-free cash in which you can use the money as you see fit. It is
recommended though to speak with your financial advisor to verify your specific
situation.
You do not make any monthly mortgage
payments during the course of the loan. You do have to follow the constructs of
the loan guidelines and are responsible for paying your property taxes,
insurance and maintenance.
A reverse mortgage is a non-recourse loan.
Neither you nor your heirs are liable for any amount of the mortgage that
transcends the value of your home.
You choose the disbursement option. There
are several ways in which you can receive the proceeds of the loan.
========
A
piece of real estate today will allow you extra income tomorrow. LEARN MORE HERE...
Imagine
yourself in your retirement age still renting a place to live..
Imagine
yourself not capable of working anymore but you have nothing with equity to
depend on.
Imagine
yourself at retirement time living only with social security money..
Own
real estate today to solve tomorrow’s financial problem..
=======
Home
Equity Conversion Mortgages for Seniors...
Reverse
mortgages are increasing in popularity with seniors who have equity in their
homes and want to supplement their income. The only reverse mortgage insured by
the U.S. Federal Government is called a Home Equity Conversion Mortgage (HECM),and is only available through an FHA-approved lender.
If you are a homeowner
age 62 or older and have paid off your mortgage or paid down a considerable
amount, and are currently living in the home, you may participate in FHA's HECM
program.
The HECM is FHA's reverse mortgage program that enables you to
withdraw a portion of your home's equity. The amount that will be available for
withdrawal varies by borrower and depends on:
Age
of the youngest borrower or eligible non-borrowing spouse;
Current
interest rate; and
Lesser
of appraised value or the HECM FHA mortgage limit or the sales price.
If
there is more than one borrower and no eligible non-borrowing spouse, the age
of the youngest borrower is used to determine the amount you can borrow.
===========
Once again, remember the rules of HECM:
''RIGHT HERE''
You
must:
•Be
62 years of age or older
•Own
the property outright or have a small mortgage balance
•Occupy
the property as your principal residence
•Not
be delinquent on any federal debt
•Participate
in a consumer information session given by an approved HECM counselor
The
following eligible property types must meet all FHA property standards and
flood requirements:
•Single
family home or 1-4 unit home with one unit occupied by the borrower
•U.S.
Department of Housing and Urban Development (HUD) approved condominium
•Manufactured
home that meets FHA requirements
======
In
the real estate game, try to be a player. If you don’t play, how do you expect
to be a winner?
U.S.
homeowners today are getting richer by the minute, but they are less likely to
cash in on their newfound wealth than during previous housing booms. As home
values rise, home equity lines of credit.
==========
Home
equity line of credit –
Guide to Home Equity Loans and Lines of Credit
(HELOCs) starts here.https://twitter.com/AGENTANTONY
The
collective amount of so-called ‘tappable’ equity, which is the appraised value
of a home minus the 20 percent most lenders require borrowers to keep as a
safety net, grew constantly.
Home
equity lines of credit or HELOCs – second loans that borrowers use to take
money out of their homes for purposes like renovations, college tuition, or to
pay down other debt. A borrower today would likely opt for a HELOC, rather than
doing a cash-out refinance on the primary mortgage.
Home
equity line of credit –
''Guide to Home Equity Loans and Lines of Credit
(HELOCs) starts here.
Home
equity lines of credit are usually offered with variable interest rates. The
rate will be tied to the prime rate-the rate the best corporate customers
receive--or some other index. Lenders will often generate business by offering
teaser rates--a ridiculously low rate that may vanish in six months. Make sure
that you know what will happen to the interest rate after the introductory
offer expires
A
home equity line of credit is a loan in which the lender agrees to lend a
maximum amount within an agreed period (called a term), where the collateral is
the borrower's equity in his/her house (akin to a second mortgage
HELOC’s,
on the other hand, have variable interest rates, unlike the 30-year fixed
primary mortgage, so the rate on a HELOC can change. A HELOC is therefore more
risky because the Federal Reserve has been raising rates steadily, and HELOC’s
follow that.
==========
If
you do shop for home equity loans, watch out for unscrupulous mortgage lenders.
They could try to entice you into signing papers for a high-cost loan that
could ultimately become a financial nightmare.
While
you might not fall for these slick come-ons, perhaps your mom or dad or a
grandparent would. These shady companies typically prey on homeowners who are
elderly, as well as those who are experiencing credit problems
=======
The
housing crash was not that long ago, but the pain in the housing market is
still being felt. Millions of borrowers lost their homes to foreclosure because
they used them like ATMs. Some are just now able to qualify for a mortgage
again.
Some of today's homeowners saw their parents lose
their homes or may have even been evicted as teenagers. Home prices are also
rising so quickly that some markets are overheating, with sales slowing even as
prices rise. That is a red flag to all homeowners because prices, historically,
eventually follow sales.
In
1998, the Federal Trade Commission issued a consumer alert on these home equity
scams. Here are some unethical practices to look for: MUCH MORE INFO HERE...
•Equity
stripping. The lender issues a loan, based on the equity of your home, not on
your ability to pay. If you can't make the payments you could lose the house.
•Loan
flipping. You are urged to refinance over and over again. Each time you
refinance, you pay extra fees and interest points which only increase your
debt.
•Bait
and switch. The lender offers you one set of loan terms when you apply and then
pressures you to accept higher charges when you sign the final papers.
•Credit
insurance packing: Some lenders will attempt to sneak in charges for credit
insurance and other so-called benefits that you did not request. The lender
hopes you don't notice this and just sign the loan papers.
•Mortgage
servicing abuses. You never get accurate or complete account statements. That
makes it almost impossible to determine how much you've paid or how much you
still owe. You may pay more than you should.
Whatif you get cold feet shortly after you sign the loan papers? Don't worry.
Federal credit law gives you three days to reconsider a signed credit agreement
and cancel the deal without a penalty. (Sundays and legal holidays won't be
counted.) You can pull out as long you are using your principal resident to
secure the loan.
=========
Reasons
Homeowners Should Get A HELOC? (Home Equity Line of Credit)
Safety
Net / Emergency Funds
Although having adequate emergency funds in
cash is always preferable, it is nice to know that you have a HELOC as a backup
in case of prolonged job loss or health problems. It’s always better to line up
credit ahead of time while you have good credit rather than when you are
already desperate. Using a HELOC can be preferable over paying sky-high credit
card interest or falling behind bills (late fees, damaged credit score).
=====
Cheap
and Flexible
The nice thing about a HELOC with no fees is
that if you don’t take any money out, you don’t pay anything. And because the
money is secured by your home, this assurance makes your interest rate
relatively low.
The
interest is accrued daily, which makes it good for quick loans. So if you do
need to take out $10,000 on short notice and you don’t have the cash on hand,
using a HELOC might be the most economical way to do it. At 6%, your interest
owed on $10,000 is only $1.64 a a day.
Of course, for many folks this convenience
might just provide too much temptation. All debt can turn into a double-edged
sword. Know thyself
====
Here’s
an example of how to use your HELOC to extract $10,000:
1.Request
a balance transfer from your 0% APR credit card for $10,000 directly to your
HELOC. Since this is loan they won’t mind at all.
2.Shortly
before the balance transfer is scheduled to arrive, write a check for $10,000
from the HELOC to your interest-bearing bank account. Now you have created a
temporary $10,000 debt at 6% and $10,000 bank balance earning ~4% (minus some
possible lost days of interest).
3.When
the balance transfer payment arrives a fews days to a week later, your HELOC
debt will be paid off.
4.A
week’s worth of interest at 6% APR ion $10,000 is only $11.50. And that is
partially countered by interest earned in your savings account.
5.Voila!
For around ten bucks, you now have $10,000 at 0% APR in your bank account to do
as you wish.
If
you cancel the loan by the three-day deadline, you won't be liable for any
amount, including finance charges. The lender must return any money paid toward
the loan within 20 days
=====
Finding
a HELOC – What To Look Out For…
Introductory
rate and period. Temporary teaser rate to suck you in.
◾Margin. This is usually how your non-teaser interest
rate is determined, relative to the Prime rate.
◾Minimum draw. How long can you take money out?
◾Required average balance. Do you have to take some money out?
◾Upfront lender fees. These days, you should be able
to eliminate these.
◾Upfront third party fees. Harder to get waived, but
try.
◾Annual fee. Just say no, again. Sometimes only
waived for first year.
◾Cancellation fee. Many have these, I guess so you
don’t bail and go to another bank. This is especially the case if they waive
all the upfront costs above, since they are losing money on you so far. As long
as you can keep your balance at $0 with no fees, just keep it open and don’t
use it. LEARN MUCH MORE HERE...
=======
