As you know reverse mortgage is something that is only available to seniors who are over the age of 62 and are eligible. There are two main types of mortgages that are categorized under reverse mortgages. These are called Home Equity Conversion Mortgage (HECM) and Non - Home Equity Conversion Mortgage (Non-HECM). Firstly, we will talk about the HECM plan, and how it works.

Basically, the HECM allows an eligible senior to pull out money from the existing equity in their home in the following modes; monthly payments for life or a term, one bulk payment, or in a LOC. The main reasons why elders would take upon this opportunity is to be able to purchase a home. As most other loans, you have to be eligible. To be eligible you would need to own your home, or atleast have a low remaining balance on the existing mortgage, this way you can pay it off at closing. You must be at this location for your lifetime, if you sell it or default, the lender has has the obligation to request a repayment of the money taken out. In the recent years, mortgage brokers/advisers have noticed that seniors have been victims of some fraudulent schemes carried out by some institutions. Due to this problem, some reputable institutions would send their clients to certain education courses, where they will be taught about some very useful information.

The following factors are taken into account when calculating the total amount given; the age of the client, the home’s present value and the interest rate. The borrowers have certain options which will allow them to pick how they want payments made.

1. The borrower will get payments every month until the end of his lifetime as long as he will abide all regulations.
2. The borrower will get payments every month for a fixed time period set at the beginning.
3. The borrower will get a line of credit, which will enable him/her to make unlimited withdrawals.
4. Option 1 + Option 3
5. Option 2 + Option 3

The fee’s for a HECM reverse mortgage range anywhere between $2500 and $6000. It usually depends on the homes value and the loan lender will take a certain percentage of that value.

Now onto Non-HECM loans, they are very similar to HECM type loans. However, there are certain differences. The good thing about this type of loan is that the limit is much higher when compared to a HECM loan. Now, every good thing comes with a tag attached that reads “Disadvantage”. The disadvantage is that they aren’t covered federally, which means they will cost more.

That’s right! How would you like to have your tenants pay your monthly mortgage payments? This would mean; not a single penny from your pocket would be going towards paying off the mortgage. As you may know now, we are talking about a rental property. Here are some tips you should follow before approaching the official purchase of a rental property.

1. Look for a good/reputable real estate agent.
2. Look for a good/reputable mortgage broker.
3. Look for a good/reputable mortgage insurance broker.
4. Try to find a property that would not be vacant most of the time.
5. Try to find a property without major work that has to be done.
6. Make sure the property was not built too long ago (inspection will take care of these aspects).

Usually, when you purchase a four unit property, it will be classified as a residential property. If its is over, it will be put under as a commercial property. The issue with a commercial property is that it requires a higher ratio of an initial mortgage down payment compared to a residential property. This is where your mortgage broker/advisor would help, they will be able to provide information which will outline exactly what is what and the cost as well. You also would not have to worry about having a large sum of money saved up, to qualify for a large property. The reason is that; the rental income would help qualify for the loan. The lender will do some calculations to get an approximate value for the rental income and take that into consideration in the process of giving out the loan. You can read more about this in one of our articles here; “Would Rental Income Help Qualify For A Loan?”. This type of property is a great revenue puller, get in this market while you can! You would also need some insurance for your property other than the mortgage insurance. This insurance would cover anything caused to your building by tenants, IE: a fire.

Useful Links & Tools
Information On Private Mortgage Insurance (PMI)
How To Cancel Private Mortgage Insurance
Would Rental Income Help Qualify For A Loan
Save Time & Money From Your Mortgage
Mortgage Tools

First time home buyers always have certain fears deep inside them. Some are scared to reveal them, worrying about whether it would make them look bad. Some others will take the chance and ask all questions. A very important step which you should take is to clear all doubts you might have, you don’t want to pay the price later for a simple question you could have asked in the beginning.

Most first time home buyers don’t know what they exactly need for the beginning processes of buying a home. Once in a while the case might lead up like this; the mortgage broker finds out what the borrower knows about the industry. If he/she thinks the borrower is totally new to this, they might try to skim out as much money as possible from the borrower. You should always be smart, act smart and talk smart. They would say, it cost this much for this and that much for that, but you should find out what every penny of your money is going towards. If something seems to fishy then it most probably is. You should read our last article “Is Your Lender Reliable? Find Out!“, to get information on how to tell if your mortgage broker/advisor is reputable.

A real mortgage broker should be able to provide information on everything regarding the purchase of your home. They most likely will not provide services like. your house inspection, but they will truly provide you with contact information to a professional house inspection company. Your mortgage broker would require you to provide legit information on income and debt. They would use this information to calculate how much money you can spend on things such as legal fee’s, house inspection fee’s and other application fee’s. Make sure you look around for a mortgage broker who would be helpful and does work promptly. Don’t look at the price tag, look at the quality of service offered. This is a major change in your life, you don’t want type of trouble. If you see your mortgage broker is not what you want, you should speak out in the beginning and not wait until the climax of the process.

Useful Links For You
BBB (Better Business Bureau)
Mortgage Tools

It is known that many people do not take the time to make sure everything in their major purchase is perfect and well established. This is a major mistake which should be decreased, because this can result in the loss in a ton of money. Every borrower should take the time to research about their lender before any professional interactions. If no information can be found about a specific lender, it wise to drop that lender from your potential list. This is why it is important to ask yourself several questions to see whether the lender is reliable and trustworthy. You should ask friends, colleagues and relatives who they used as their mortgage lender, and get a lot of information, this way you can compare what is out there. Listed and described below are a list of questions you should think about before any contract agreements. 
 
1. How Long Has This Financial Institution Been In Business? 
 
You should find out how long your lender (mortgage loan lender) has been in business doing what you are looking for, especially is it is a bad credit mortgage company (very important). It is best to avoid companies who have been in business for only a recent period of time because in these cases, there is a higher risk for fraud or bankruptcy of any sort. In the case of a bad credit mortgage loan lender, it may be that the company is just trying to cash out on some innocent customers. Another option is that the company might have changed its name due to some legal issues which may have affected its business model. You should check with BBB (Better Business Bureau) to see how long an institution has been in business for. 
 
2. Your Loan Should Be Personalized 
 
If your mortgage lender just gives you option off the top of their head and tells you, this is your plan, you should avoid such a company. A real professional mortgage broker/advisor should examine your case and look at your financial status and provide a specific plan that best fits you. They should explain all the information clearly and provide it to your in writing which you would keep as a hard copy. If anything goes wrong, you have proof of the agreed information. 
 
3. Lies Do Not Exist In Business 
 
When filling out forms for your mortgage application, your lender should warn you to provide legit information. If the lender suggest to lie about something in the application, you should definitely avoid this institution. Some people think, the lender is being friendly. This is not always the case, this can lead to dangerous situations. Most of the time, bad credit mortgage lenders would suggest to boast on your income level, so you will be granted a loan. If for any reason, you feel that the appraisal seems higher you should consult with someone at the same time. 
 
4. Do You Have A Professional Working For You? 
 
From the beginning to the end of the closing, you should have someone working with you & working for you. They should be someone who is reachable for information, when you need it. You do not want someone who, you spend have the time trying to contact. It’s best to choose a financial lender who will provide a professional who will work with you till the end of the deal agreement.