A lease purchase can also be defined as a plan which allows you to lease a home, with the ability to purchase it with-in a set period of time. The time frame will usually be in the first three years and the price will be agreed upon in the agreement signing in the commencement. There is a down payment which will be required in the commencement, which is usually in between 1% and 5%. The buyer will be paying a rent and a rent premium to control the purchase. This type of a deal can be made so that the buyer/seller will profit.

Should I Rent or Buy?

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.

The real estate industry is an industry in which a huge sum of money can be earned with minimal work. Although, with the high demand and competition it can be difficult for people to find the right mortgage loan, mortgage plan or even the right mortgage loan lender. There are many different options to choose from and they all work differently. Due to this fact, it is best to work with certain officials who are have experience in the market. These officials can be mortgage brokers, financial advisers or mortgage loan lenders, they will help you get the best plan for your loan. There are several type of mortgage brokers working in a different field, they can be classified by financial institutions such as;

• Online Mortgage Companies
• Bad Credit Mortgage Lenders
• Credit Unions
• Traditional Banks

Now, each of these comes with pros and cons, but they all have their own unique benefit. Credit unions usually offer competitive rates. People have mostly experienced that banks don’t offer the best rate possible for you. Online mortgage companies work well. Many companies have been built up to a reputable status online that is second to none. For people who have gone through some hard times and have a lower credit score than the average, their are plans available for you as well. If you were to got to a credit union or a bank and you had a bad credit, it would not be possible to get a bad credit loan. This shows, there is a possibility for everyone to own a home! So getting in touch with a quality experienced mortgage broker can be well worth the effort because he/she will province the best solution for you and your family.

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Many home owners have a fixed rate on their mortgage, and when the mortgage rates on a downhill trend, the best solution is to refinance at that low interest. It sounds hip and beneficial, but it takes a lot of time and cost. The cost involved in refinancing your mortgage is not so high, but it is still money. Now, in some situations, the cost of refinancing would be more than what you are trying to save. It all depends on the situation you are in. We will consider a few principles here. Firstly, if you have an adjustable rate mortgage, and the rate has spiked up, it is best to refinance at a lower rate. The best part is that, in this type of loan, the rates are free to change, and when they drop it is an awesome time. Sometimes, you would be paying more than what you would be paying with a fixed rate mortgage. Secondly, a huge sum of people go with a fixed rate mortgage rate because it will keep the rate at a constant level. This is the most favoured mortgage loan type. This is a good choice, especially when mortgage rates go up, you would still be paying at that low interest rate you got a couple years back. Thirdly, you look at the total cost involved in refinancing the home. You should look at how long you plan on living at that resident. Closing cost can reach the thousands, so you should calculate and see when you would break even, if you don’t, it is not worth the hassle.

EXAMPLE: Let’s just say your monthly down payment was reduced by $120 and your total closing cost on the mortgage was totaling $4000. This means you would have to live at that home for 34 months, to break even. If you move before the 34 months, this refinancing wouldn’t profit you.

Fourthly, the total equity you have in your home is an added bonus. If you have been living at your current residence for a while, you would have some good equity. Now, if you refinance at a lower interest and a loan amount as well. This is like a double promotion. Overall, this will reduce your monthly mortgage payment. Lastly, the new refinanced mortgage period will be added on to your existing mortgage. Lets say you had 20 years left on your 30 year mortgage, and you refinance for a 30 year mortgage; you will be back where you started again.

In conclusion, you can see there are many important factors that plan an important role in determining whether you should refinance. When you plan on refinancing determine whether you benefit from it. Your credit rating  comes into play when you refinance. If you have do not have a good credit rating, you would not be eligible for the best rates around. So, next time you see a low interest rate on an ad, its okay to jump off and take a look, but make sure to calculate and see whether you would benefit from it. You can contact your local mortgage advisor or financial advisor for more information. You may use our mortgage calculators to help you as well.