For example, from April to July rates have been dropping quite steadily, but for the last several weeks they have leveled out, and don’t seem to be dropping again.  In fact, all signs point to rates going back UP before we see any type of drop again.

What does this mean to you?  It means that if you are on the fence about refinancing your mortgage you should take advantage of these low rates NOW before they go back up.  This is the best we have seen since 1972, and if you don’t feel like waiting another 40 years you should CONTACT US as soon as possible. You can also SEND US AN EMAIL or FILL OUT THIS FORM and we will review your situation.

We can get your loan refinanced faster than you could even imagine. OK maybe not faster than you could even imagine, but I can guarantee you it’s quick.

The truth is, a reverse mortgage can offer extremely beneficial assistance (monetarily) to a senior who may be out of options or who is just strapped for cash. But what exactly is a Reverse Mortgage?  How do they work?  What are the requirements for obtaining one?  All of these questions will be answered in the following guide.

In the most basic sense, a reverse mortgage is a special type of loan that lets you convert a portion of the equity in your home into cash. What this means is, the money you have built up over the years by making home mortgage payments can essentially be paid back to you. This is different than a traditional cash-out refinance or home equity loan because there is no repayment required until you no longer use the home as your primary residence. You can even choose whether to be paid all at once, in regular monthly advances, or in increments and amounts that you choose! Yippee!

To further explain, here are some of the most frequently asked questions and answers about Reverse Mortgages.

• Who can qualify for a reverse mortgage?

Seniors 62 years of age or older may qualify. There are virtually no income limits or qualifications you need to meet (even in regard to your credit).

• What kind of houses are eligible for a reverse mortgage?

The main establishing criteria for a reverse mortgage is making sure that the home in question is the borrowers primary residence (where you live most of the year). Primarily, reverse mortgages are taken on single family, one-unit homes. Some programs will also accept two-to-four unit buildings, as long as they are owner-occupied. Other programs even offer reverse mortgages on condominiums and manufactured homes, as long as they are built after June of 1976. Typically, mobile homes and cooperatives are not eligible for a reverse mortgage. Feel free to CONTACT US if you are interested in seeing if your home qualifies for a reverse mortgage.

• What fees will I run into if I decide to get a reverse mortgage?

Typically a reverse mortgage will have an origination fee, third party closing costs (such as an appraisal, escrow fees, and title insurance), and a monthly servicing fee. Whats good, though, is that these charges can be paid from the proceeds you receive from the reverse mortgage, which results in no immediate burden to you as a borrower (the costs are added to the principal and paid with interest when the loan becomes due).

• Is it true that if I got a reverse mortgage then the lender would end up owning my home?

This is definitely not true. Being as the borrower, you will still automatically retain the title to the property. The reverse mortgage lender is merely extending a loan to you. That being said, because you still retain title as a homeowner, you will remain responsible for paying such things as the hazard insurance, property taxes, and any maintenance required to keep the home in a livable condition.

• Does how much money I make (or don’t make) influence my ability to obtain a reverse mortgage?

No way! Since you won’t be required to make a monthly mortgage payment, there are (hence) no income qualifications!

• Can the bank take my home away if I outlive my reverse mortgage?

Absolutely not.  Your loan isn’t even due at that time either.  In fact, as long as you or another borrower (ie spouse) continue to live in the house as your primary residence (and you keep current on your taxes and insurance), you won’t need to repay the loan.

• Are there any stipulations or requirements in regard to how I use the money I receive from a reverse mortgage?

Nope.  You can you the money you receive for virtually anything under the sun (as long as you can afford it). This includes home improvements, health care expenses, vacations, groceries, etc, etc, etc. For many people, the funds received from a reverse mortgage are used to provide somewhat of a security blanket in case unexpected expenses arise.

• I still owe money on my existing mortgage.  Can I still get a reverse?

Of course.  You may be eligible to receive a reverse mortgage even if you still owe money on a first or second mortgage.  Actually, the funds you receive from the reverse can even be used to pay off whatever existing mortage you have!

• What are the main advantages of getting a reverse mortgage?

There are many actually, but here are some of the most significant:

1. A reverse mortgage lets you keep your independence by allowing you to remain in your home and retain home ownership.
2. There are NO monthly mortgage payments required. You are not required to pay back the loan or make any monthly mortgage payments until you permanently move out of the home.
3. Tax-free money. Because the money you receive from a reverse mortgage is not considered income, it is tax free and will not affect your Social Security or the benefits you receive from Medicare.
4. Freedom and flexibility. You are free to use the money from a reverse mortgage in any way you choose or deem necessary.

Do you have a question or comment for us about Reverse Mortgages?  Feel free to comment below or CONTACT US if you want to ask anything specific!

- Pate

The truth is, few thing in life can compare to the fun filled adventure that is refinancing your mortgage. Wait, what did I just say? That doesn’t seem quite right.

The truth is, dealing with a refinance can be quite the arduous process, and for the most part, it’s not fun at all. This can be attributed to the abundance of paperwork to fill out, the random lender fees, and the sheer fact that most people don’t like modifying their mortgage to begin with.  But there is a reason so many people subject themselves to these hardships, and there are times when refinancing your mortgage is an extremely smart decision that can save you thousands of dollars over the life of your loan.

You may have heard on the news that interest rates have been hovering around historic lows lately, and because of this, thousands of homeowners have refinanced their mortgage in order to cut their monthly payment. You might be wondering how this works.  Basically, by replacing (refinancing) your old mortgage with a new one (that offers a lower interest rate), you can possibly save  hundreds of dollars per month. Imagine if your monthly mortgage went from $1500 a month to $1200. Wouldn’t it be nice?

In fact, lowering your monthly payment may not be the only situation where a refinance would benefit you. You would also want to consider this if the mortgage you are in is (the dreaded) adjustable rate mortgage.  If you find yourself in this situation,  and interest rates are expected to rise, it would be extremely smart to lock yourself in a lower, fixed rate that will keep you sleeping soundly no matter how high rates may sail. And let me tell you, the sky is the limit.

Another reason a person may be interested in refinancing their mortgage is so they can take cash out of the equity they built up over the years. Instead of just refinancing for the amount they currently owe, they may pull out additional funds to use for improvements on their house, starting a new business, or even putting their kids through college.

Of course though, just like everything else, refinancing a mortgage is not free. It would be nice if it was, but that’s just not the case. While you might catch a break and your lender may help out with some of the charges, it is extremely likely that you will still be looking at several thousand dollars in closing costs to pay for a quality refinance. Obviously you must consider these closing costs when deciding whether or not to follow through with the refinance. The trick is figuring out how long it will take before the lower monthly payments make up for the added fees and closing costs. We call this the “break even” point.  Once this point is met, each month afterward you start seeing the extra cash in your pocket.

The biggest thing to consider in regards to this (if you’re doing the refi to save money) is how long you plan on living in the house, and the difference between your old rate and the new one. Long story short, the bigger the difference in rate and the longer you plan on living there, the quicker you start saving moolah!  Wahoo!

To find out if doing a refinance would be cost effective for you, you need to find out what the break even point would be for your mortgage.  To figure this, simply divide the amount of closing costs by the amount of monthly savings.  For example, if you are saving $300 a month, and your closing costs are $5000, just do the math:

$5000 / $300 = 16.67

Meaning that after a year and 4 months (approximately) you would start seeing the savings.  So if you are planning on living in your house longer than this, a refinance would be beneficial to you!

As always, if you have any questions or comments, or if you are interested in a refinance yourself (and you don’t feel like doing any math), don’t hesitate to CONTACT US. We will evaluate your current situation and let you know if a refinance might work!

- Pate

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