Gsmortgages

Reverse Annuity Mortgage Tapping Into Your Equity

Reverse annuity mortgages (RAM) were created to allow older Americans to tap into the equity of their paid for or nearly paid for home. Homeowners receive a tax-free payment each month, and the mortgage is paid when the home is sold. Before you choose a RAM, make sure you have evaluated the risks since this option can limit future housing plans.

Types Of Reverse Mortgages

One of the first RAM programs was developed by HUD and is still in existence. To qualify you must be 62 or older, live in the home, and have paid off your mortgage. The government will then insure your mortgage.

You can also work directly with private lenders. You will want to review their terms carefully to be sure that you are getting the full value of your home and not paying thousands in fees.

With both types of RAM you will never owe more than what your home is worth. When you decide to move, the loans principal, interest, and fees will be due. Any equity remaining from the sale of your home will be yours or can be based onto heirs.

Difference Between A Reverse Mortgage and A Home Equity Loan

The major difference between a RAM and a home equity loan is when the loan balance is due. With a RAM, the mortgage balance is due when you stop living in the residence. You dont have the monthly payments of an equity loan. With a RAM it is easier to qualify for the mortgage since you dont have to have income to make monthly payments.

Payouts Options

There are several payout options that you can choose from. A tenure policy provides equal monthly payments as long as the borrower lives on the property. A term policy gives equal monthly payments for a fixed period of months. With a line of credit the borrower to withdrawal funds when needed. A modified tenure combines a line of credit with life long monthly payments. And finally, a modified term provides a line of credit with fixed monthly payments.

Beware Of Scams

There are several scams related to reverse mortgages that you should be aware of. You should not pay thousands for information about a RAM. This information is available freely through HUD and legitimate mortgage lenders. You should also avoid any terms that require payments before you sell or that sell your house within so many years. To avoid scammers, research terms and rates with several lenders and ask questions.

Re-mortgaging the benefits

Banks are reporting that the numbers of customers re-mortgaging their properties is at its highest ever. Most of these customers are seeking to take advantage of two important trends in the economy. The first is that lower interest rates, and increased competition among banks and financial institutions is leading to better and better deals being available on the market in general. The second is that most borrowers financial situations have improved dramatically since they have first taken out their mortgage and therefore they are able to get far better terms and interest rates for themselves. For example, most people who take out a hundred per cent mortgage will be able to switch it, within two years, to a ninety or ninety five per cent mortgage that offer significantly better terms.

For the last couple of years, interest rates in the economy in general have been at historically low levels. Even with recent rate increases, current rates are still far lower than they were when many mortgages still being paid were first taken out. This means that there are savings to be made by fixed rate mortgage holders who can pay off their old mortgage and replace it with a new one taking advantage of todays lower rates. Even for people with variable mortgage rates there are savings to be made as the formulas for calculating the payable rate may have become more generous in recent years.

This is especially true if you look at the increased competition at play in the mortgage market. The main banks have been joined by a plethora of competitors from Britain, the US and Europe, who are all seeking to carve for themselves a share of the market. They are now offering customers better deals and mortgages with more attractive and flexible terms than any lenders have been willing to do in the past. New products mean you can take advantage of discount periods, make over or under payments, off set your other savings against your mortgage or take out interest only mortgages. Many people who took out mortgages in the past are deciding to switch to one of these new products.

Also, for many borrowers, as time passes, the value of their home has increased significantly and their income has also increased. This will make them eligible for mortgages that they may not have qualified for in the past. These mortgages will offer them lower rates and better terms and conditions and so will be persuading them to make the switch and opt to re-mortgage.

Ready to Trade-In Your Home? Perhaps You Should Remodel Instead!

Ready to Trade-In Your Home? Perhaps You Should Remodel Instead!

Moving:
A good local real estate agent should be able to assist you with estimates on these numbers.

How much will it cost to purchase a home that will meet your needs?

How much could you sell your existing home for? Don’t forget to subtract the agent’s commission from this total.

What will it cost to move? According to real estate consultant and best-selling author of Remodel or Move, Dan Fritschen, a typical move costs 10% of the value of your home.

How much will your property taxes increase as a result of the move?

Remodeling:
What projects do you want to have done and how much will they cost? An architect or general contractor will be able to assist you with these figures.

How much will the improvements add to the value of your home, also known as the “payback”? A local real estate agent can assist with this as well.

If the decision about whether to renovate or move were purely a financial one, then it would be quite easy to look at the numbers and come to the right conclusion. However, there are also emotional factors that come into play, and they have a value as well. Let’s consider some examples.

Reasons you may want to move:

If you relocate to a new neighborhood, your children could attend superior schools.

You would like to reduce your commute or have better access to local amenities, such as restaurants and shopping.

You’re not particularly fond of your current neighborhood.

Your yard is too small, and you cannot expand it.

Reasons you may want to stay and remodel:

You’re happy with your location. It’s convenient, you love your neighbors, and the schools are either excellent or are not a factor.

You love the layout of your home.

All you need is a little more space, and your home will be perfect.

Of course only you know what is truly important for your happiness, so try to use these questions as a starting point. Create a list of the pros and cons of each scenario and leave it someplace accessible, so that you and your spouse can add to it as you think of additional factors. You may also want to consider attending open houses and visiting new housing developments to see what is available and how your home compares.

Once you’ve completed your list and your financial assessment, it’s time to draw some conclusions. Are the numbers and the emotional factors pointing you in a clear direction? If you’re still feeling unsure and would like some additional assistance, you may want to read Dan Fritschen’s book, Remodel or Move, or visit his website. Both contain a calculator that will assist you with the difficult task of quantifying the ramifications of your decision. In addition, you can learn tips to assist you with the next step, after you’ve determined what it will be.

If you choose to remodel, then you’ll need to have a clear idea of what you want to accomplish before finalizing any details with the contractor or architect. One of the most expensive things you can do is change the project midstream.

If you decide to move, then there are low-cost improvements you can make to your existing home that will help it to sell more quickly. The kitchen and the bathrooms provide the biggest return on investment in this area.

Whether you decide to remodel or buy a new home, it’s important to ensure that you have proper financing in place prior to moving forward. If you decide to purchase a home, a mortgage originator will help you to determine how much you can afford, as well as which loan package works best with your overall financial plan. In the case of remodeling, you should meet with a mortgage professional before any construction takes place. Otherwise you may severely limit the type of financing options available to you.

Programs To Help You Fund Your American Dream

The American Dream of home ownership is on the rise across the United States. According to the latest figures available, the US homeownership rate reached a record 69.2 percent in the second quarter of 2004, up from 68.3 percent in 2003. And for the first time, the majority of minority Americans own their own homes.

Owning a home provides tremendous benefits for families and for the communities in which they reside. Homeownership provides a sense of security and allows families to build wealth. A home is the largest financial investment most American families will ever make. Homeownership translates into a greater concern for neighborhoods and their communities as owners work to maintain the value of their greatest investment.

However, the most significant stumbling block for many low- to moderate-income families is being able to afford the down payment and closing costs. Fortunately, there is help – through down payment assistance programs or DAPs.

DAPs have been around for years yet many people, the people who could use them most, dont even know they exist. With home prices and interest rates on the rise, theres no time like the present to explore these programs and their benefits.

The Nehemiah Corporation of America has helped over 170,000 families and provided more than 659 million in gift funds since 1997. They offer gift funds up to 6% of the final contract sales towards your down payment andor closing costs. These grants are available to both first time and repeat homebuyers. There are no income or asset limits, no geographical restrictions and the gift funds do not have to be repaid. For more information about this program, visit www.getdownpayment.com or call 1-877-634-3642.

Another national provider of a DAP is Ameridream. To participate in AmeriDream’s Downpayment Gift Program, a homebuyer must contact a lender and qualify for a loan that allows gift funds, and the homebuyer must purchase a home from a builder or seller who has enrolled his or her home in the program. Visit www. ameridream.org for more information.

Partners In Charity, www.partnersincharity.org, is another national organization assisting families in achieving the American dream. PIC gives a down payment to those who demonstrate their ability to responsibly pay their rent and bills each month, turning renters into buyers.

They refer applicants to a licensed mortgage lender and licensed realtor who assists in finding the right home and the right financing package. Or, the buyer can chose to work with someone they already know. The mortgage lender then requests the gift of a down payment from Partners In Charity in the amount of 3%, 4% or 5% for the buyer. And, the gift never needs to be repaid, ever. PIC takes the gift giving one step further by also giving a gift to a community charity selected by the real estate team.

In addition to these national resources, there are also many state, city, and faith-based sponsored programs available to assist families, especially first-time homebuyers. Different agencies have various programs, requirements, and limits. If you dont qualify for one program, keep checking around. The important thing to remember is that help is out there. And with a little help, you can achieve the American dream!