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Finding lenders online who will tell you the many advantages of a Reverse Mortgage is easy. But what are the potential disadvantages?

A Reverse Mortgage can provide emergency funds when you need it, but make sure to do your homework before applying for a one.  While there are literally hundreds of reverse mortgage websites outlining the many advantages of a reverse, it is important that seniors are just as aware of some potential disadvantages.

If your income from retirement no longer covers your expenses, current mortgage payment or you’d simply like to secure your retirement years a bit more, you can use the equity in your home to apply for a reverse mortgage if you meet the following criteria.

The youngest borrower must be age 62 or older, live in the home and either own your home outright or have a low enough mortgage balance that can be paid off at closing with proceeds from the reverse mortgage.

Also, one must receive consumer protection information from a HUD approved counselor before obtaining the loan.

What are the Disadvantages of a Reverse Mortgage?

Closing costs are substantial. While the fees are similar to a traditional FHA mortgages, Reverse mortgage fees include mandatory FHA insurance of 2% of your home’s value plus origination fees that range between $2,500 and $6,000. Fees are most often rolled into the loan and not paid upfront. Because HUD is the program administrator, all fees are fixed.

Unfortunately, you may be approached by financial advisors who want to charge you for advice about reverse mortgages or sell you a reverse mortgage. Most of the information you need about reverse mortgages can be found online from HUD. Do not apply for a reverse mortgage from any company that is not approved by HUD.

It’s important to calculate the cost of a reverse mortgage against what you would gain, because once you enter a reverse mortgage agreement, the lender holds title to your home.

Get sound advice. Discuss your reverse mortgage plans with legal and financial advisors, and trusted  family members, before making a decision. If possible, only work with a large reputable bank that will meet with you and family members face to face.

Because home ownership is often a person’s most valuable asset and since your equity is now depreciating, obtaining a reverse mortgage is akin to spending money you’d expect to leave to your heirs.

Be sure that the older homeowner is thinking clearly when making this decision (no dementia or symptoms of Alzheimer’s) because having a sudden influx of cash can be a heady experience and it would be a shame to waste it or become the victim of a scam.  BEWARE of any lender or adviser that suggests an annuity in any way!

Although Social Security and Medicare are not affected, Medicaid and other need based gov’t assistance may be affected if too much funds are withdrawn and not spent in any one month.

Since your equity is declining, obtaining a reverse mortgage may prove to be a hindrance to moving to a new home in the future.

If you are considering a reverse mortgage, it’s important to get as much information as you can, and to consider all of your options. There’s a wealth of free information to help you decide.

http://www.reversemortgagetoday.org/Rev_Mortgage_Disadvantages.html

Article Source:http://www.articlesbase.com/mortgage-articles/reverse-mortgage-disadvantages-1708419.html

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Mortgage bankruptcy filings are on the rise as homeowners continue to struggle financially. The American Bankruptcy Institute states bankruptcy filings rose 35-percent during 2009 and millions more are anticipated during 2010.

Mortgage bankruptcy is also referred to as the Conyers Bill; a controversial bill enacted by legislation in 2007. The Conyers Bill modified terms of the Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA) passed by Congress in 2005.

Controversy stems from the fact the Conyers Bill grants bankruptcy courts authorization to alter existing mortgage terms to benefit borrowers. Mortgage terms that can be changed include: reduction of principal mortgage balance to reflect appraised property value; reduced interest rates; and elimination of excessive fees.

Altering mortgage terms provides homeowners the opportunity to regain control over finances. As long as borrowers adhere to modified loan terms, mortgage lenders can recover financial losses and avoid foreclosure.

Under Conyers Bill, borrowers are required to provide evidence they are financially insolvent and unable to cure mortgage arrears. The bill provides relief to eligible homeowners who want to keep their home in the event of bankruptcy.

The mortgage bankruptcy bill offers protection to homeowners who obtained subprime or non-conventional mortgage loans after January 1, 2000 and later filed for chapter 13 bankruptcy. Borrowers are required to provide sufficient evidence proving they lack the financial ability to stay current on their mortgage note.

When debtors petition the court for bankruptcy protection their main objective is to save their home from foreclosure. Since Chapter 13 provides financial relief by restructuring debt and extending payment terms, bankruptcy courts can control payment terms to ensure creditors and debtors are protected.

Debtors are required to submit chapter 13 payments directly to the bankruptcy Trustee, who in turn distributes payments to creditors. If debtors do not adhere to their repayment plan, creditors can petition the court and seek dismissal of the bankruptcy petition.

A judge will take the petition under advisement and review events which caused debtors to fail out of bankruptcy. The judge can either allow debtors to file Chapter 7 or dismiss the case. Chapter 7 requires debtors to liquidate assets and use proceeds to pay debts. Outstanding balances are discharged and debtors are no longer responsible for repayment.

When mortgage bankruptcy petitions are dismissed, debtors lose all protection from the court. Creditors can move forward with collection action at the point where they left off prior to the debtor’s bankruptcy filing. In some cases, foreclosure can begin within 72 hours of failing out of bankruptcy.

Homeowners considering mortgage bankruptcy should obtain legal counsel from a qualified bankruptcy attorney. Personal bankruptcy has serious financial consequences which remain on credit reports for ten years.

When possible utilize bankruptcy alternatives such as debt consolidation, debt settlement, or credit counseling. For borrowers with no other options, mortgage bankruptcy might be a solution to saving their home as long as they can adhere to the repayment plan.

Simon Volkov is a California real estate investor who provides solutions to individuals facing mortgage bankruptcy and foreclosure. His website provides resources and articles on topics such as debt management, bankruptcy alternatives, credit counseling and personal investing. Simon is currently buying pre foreclosure homes in Orange County and southern California, Nevada, Arizona and Washington. If you need to sell your home fast, submit property information via the “we buy houses” form at www.SimonVolkov.com.

Article Source:http://www.articlesbase.com/mortgage-articles/mortgage-bankruptcy-tips-to-save-your-home-from-foreclosure-1636482.html

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Cash back refinancing options are a great way to use a homes equity for an immediate financial need. Also, a mortgage interest rate is usually much lower than a personal loan or the rates you pay on existing debts. This can be a great way to obtain a large amount of money, quickly, with no money down, and at a good interest rate. Here is some advice for homeowners looking into a cash back mortgage refinancing.

When a homeowner gets cash back from a refinancing, it is not that complicated of a process. Basically, the homeowner is just taking out a new, larger loan and replacing their existing mortgage with it. The difference in amounts will be pocketed and the homeowner can use that money for whatever they wish. However, a homeowner typically needs some equity in their home for this option to be available to them.

Say you owe $50,000 on your $150,000 home over the next 10 years. You could refinance into a new $100,000 dollar loan, pay off your remaining mortgage balance of $50,000, and pocket the remaining $50,000. Your home loan length, interest rates, terms and conditions can be effected by this, but sometimes it is actually helpful.

While not all homeowners will benefit or even be able to get a cash back refinancing, many will. This money can be used for anything a homeowner wants, but it is best to have a plan for it. Using it to reduce other high interest debts, to improve or repair a home, or to pay tuition or hospital bills is a great way to utilize the money and better your financial future. However, you can use the money however you want and for anything you want.

Just always remember that eventually all the money you borrow will need o be paid back. If you go into a cash out refinancing with a plan, you most likely will come out ahead and truly benefit. Many people though just want a lot of cash on hand to do with what they please. While this is not wrong it is not necessarily a good decision. Have a good plan and take care of your future.

I have been underwriting mortgages for years. Recently, I got into a new business but I still wish to share my advice, tips, and industry inside happenings of the mortgage refinancing industry.
For more articles on Mortgage Refinance check out my website

Article Source:http://www.articlesbase.com/mortgage-articles/cash-out-mortgage-refinancing-help-for-homeowners-1609288.html

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The question we have been asked most often since beginning to write mortgages has been, How Do I Know When It’s Time to Refinance?  The old, conventional wisdom said that it should be done when rates go down 2% lower than your current mortgage, but this rule of thumb is too simplistic.  The higher your loan balance, the less of a percentage difference in rate is needed to make the closing costs worthwhile.  Because of inflation, the average house value and therefore the average mortgage balance today is much higher than in the past.  If you live in a high cost area, your mortgage is likely to have a higher balance.  Additionally, closing costs may vary widely from state to state, with New York, for example, considered a High Closing Cost State according to the Federal Housing Authority (FHA). 

There are several things to consider when deciding whether to refinance: 

1. Monthly savings that will come from decreasing the rate.  It is very important to actually do the math for your specific situation.  Taxes & insurance stay the same because they are not dependant on whether you change your loan – but still look at your whole monthly payment after in case the payment goes up.

2. Whether there is any sort of prepayment penalty or early closing fees applicable on your current mortgage(s) – including any second mortgage or home equity loan/line of credit.  You need to get out your closing documents and read the specifics.  Don’t rely on your memory of the last transaction, read your documents again.  We have found that often people’s memory of old transactions is not as good as they think, and if we did not help you with the last transaction, we won’t know without seeing your documents.  We are always happy to go over them with you if you like.  Just because some early closing fees apply, it doesn’t necessarily mean that a refinance won’t be worth your money.  A good mortgage broker can help you decide when a refinance is recommended based on the specifics of your situation. 

3. Your closing costs which may vary by:  whether it is possible and worthwhile to do a “streamline” refinance, whether your property is a coop, whether it is an investment property, whether a No Closing Cost loan is available to you. 

4. How long it will take you to pay back your closing costs. 

5. When you will likely sell the property.  If you don’t know, try to estimate the earliest time you think you would sell, and the longest time you expect to own.  If you are going to sell before you recoup your closing costs, it is not worth doing.

6. How long it will take you to own the property free & clear.

7. Factors other than rate: they generally should occur along with a rate decrease for maximum benefit to you, but may make a refinance more worthwhile: cheapest cash for improvements, or shortening the term to finish you loan early.  A word about consolidating debt: this may pay off, but please be warned that if you run up credit card debt again, you will then have both a larger mortgage and credit card debt. 

Reasons not to refinance: 

1. Purely for the tax deduction with no other benefit.  Why pay $100 in interest just to pay $30 less in taxes?  You are still $70 poorer.

2. For the rate, but without regard to the “big picture” savings in dollar terms.  This is generally true if your balance is extremely small and you don’t need any cash.

3. If you are probably not going to own the property long enough to recoup your closing costs – see above discussion (or link to same page)

Additionally, if you are considering getting an adjustable rate mortgage (or ARM) (whether you currently have one or not), see this site for my article entitled How Would an Adjustable Rate Mortgage Affect You?

Suzanne Player is a former bank mortgage loan officer and mortgage broker who has counseled many homeowners and prospective homeowners on their debt and personal finances. She has seen the urgent need for increased financial literacy in the U.S. and has written articles about personal finance to help Americans become more educated about money matters.

Article Source:http://www.articlesbase.com/mortgage-articles/how-do-i-know-if-i-should-refinance-1594523.html

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However, there are about 1% of mortgage loans are different types, there are 1% of mortgage loans and the two main key to victory is really.

The first key is set correctly from the beginning of the loan is to check.

And the second right to get the most benefit and to ensure that the loan will be used.

First, AOS Let’s talk about how the loan works. Then we correct these  to provide mortgage loans to loans set to get financial rewards go.

And, 1% of the mortgage loans have the option to start paying. When this option to 1% per month on your 30-year fixed payment, 15-year fixed payments, interest payments have to make only the minimum payment and will receive a statement of your mortgage.

Although this will have a different payment option, you only need to select 1% of the minimum payment.

Why?

Because if you want fixed for 30 years, 15 years or a fixed interest only payments, you are getting the type of loan will be better. Typically, these payments as a payment option mortgage loan increases.

If you are the first benefits will be greatly reduced, 1% of the monthly minimum payment is selected. Your mortgage payment will likely be half. Of course, most of it very attractive for home owners is the first benefit.

What you need to save 1% to select the minimum payment is the effect of the compound. For example, AOS 1% of your mortgage, your credit card to pay all the house refinanced, let’s say $ 1000 per month with one months pay was reduced.

Now, if you then give it to the creditor directly instead of $ 1000 per month, you are $ 10,000 in cash at the end of 5 years later – and the return to 0%, AOS.

Now, a 1% minimum payment option is selected, the second benefit AOS:

Tax savings.

If you only have to pay your mortgage balance will remain interest check. If you actually pay less attention to only one percent more than the minimum payment. Therefore, you will increase your monthly mortgage funds can create an interest in acting.

Deferred interest in mind before you and the mortgage interest is tax deductible so keep hanta

Come on, AOS in the value of your home is going to $ 2000 a month. 1% mortgage loan, you can take a small piece of gratitude to, say $ 500 a month and turn it on taxes.

So, taking a small piece of the monthly stock and is going to tax. This has not been any audit will be put on stake.

Co., one of the great and obvious benefits of owning a home is one of many. However, the 0% return on equity investment will be.

No one else in your home this month for the stock is going to cut a check. As a matter of fact, if you want your home to sell or loan your home would be out of stock. And you better qualify or will not be able to get a loan.

So set a monthly tax on a small piece of the stock received $ 1000 for one months at the same time that she? But you will still have a lot of stock in cash and stock that you are the 1% mortgage loans.

If you regularly than you or 30 years fixed interest only mortgage loans was more financially ahead you will continue to do so for the length of time.

By the way, if the delay is a bi-weekly payments and your interest. Create a bi-weekly payments in some cases reduce the interest in smoking and eliminate all together. This will increase your mortgage balance means.

How the loan must be set correctly:

1) 1% of these loans in the first five years the payment options available. But actually a 30 or 40 years is to keep these loans. If you pay the monthly payment option will be lower, but 5 years does not select a loan 40 years. The name of the game for a long time as possible to maintain 1% of the payment will be. I get 30 years amortization.

2) three decades, only 15  payment was tied to the index. Le fast-moving index like the MTA instead of Laverne that (Monthly Treasury Average), and selected as a slow moving index (the London Inter – bank offered rate).

So what if I lose 1% of mortgage loans Mind?

Answers – depreciation.

If your home is worth in the region is rapidly going down, are you interested in acting can be caused by upside-down home.

But in the case of 5% appreciation rate of 3% occurs, and your minimum payment, mortgage loans by 1% of your financial future can have a tremendous positive impact to what can be saved.

1% mortgage loan collateral, and other related topics For more information, please visit: http://www.marvelzombies2.com

Founder http://www.marvelzombies2.com

Article Source:http://www.articlesbase.com/mortgage-articles/get-1-from-mortgage-loans–1535808.html

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