What is reverse mortgage? Do you know the meaning of the term of reverse mortgage? Yeah, it seems odd to discuss reverse morgage lenders if you have not know what is meant by the term. Therefore, it is better to start todays discussion with the broad explanation of reverse mortgage lenders. Actually, the term of reverse mortgage is a special loan which is aimed to help those homeowners which are over 62. It is totally different from the usual traditional mortgage that obligates the people who owe the money to pay the mortgage charge every month. Instead, those who recieve this mortgage reverse will get certain amount of money from the lenders each month. Is there any requirement to gain this reverse mortgage? Yeah, the one recieving this payment each month should live in his or her original home which has been outrighted or under mortgage with balance and should not be too excessive. So, are you the one should get this special loan?

After knowing the definition of reverse mortgage, so you have to know another thing about it. It is just not funny to deal with reverse mortgage if you don’t know who will pay you each month. Then, the question is who is the biggest lenders? Coming back then to the history, you have to know that the Home Equity Conversion Mortgage program in USA was dominated by large banks. There were three biggest banks in America which lately became the biggest lenders in 2011. They were Wells Fargo, MetLife Bank and Bank of America. In this range, Wells Fargo and Bank of America origin for about 43%, and MetLife Bank gains the total amount of the 4th and 5th rank of the organization.

However, today’s reverse mortgage seems to be unlike with the past ones. The starting point of the reversal moment was when the Wells Fargo and Bank of America left the business of loan. It caused the decreasing price of home, and there was no ability to decide whether an individual is qualified for a loan or not based on the borrower’s financial condition. The situation was worsen when MetLife also decided to exit the business in 2012. It moved aways from banking retail business, and finally mortgage is dominated with mortgage originators which are far from serving the function of traditional bank.

In reverse mortgage loan, the borrower’s is the one taking the responsibility to pay the property taxes and also homeowner’s insurance. In reverse mortgage, the elders are allowed to access the property that he or she has built in the past, and he or she also recieve the right to defer the payment of the loan until he or she move, sell the property or even die. The no required mortgage payment causes interest which is added to the loan balance each month. In this case, the exceeding interest is sometime beneficial to increase the price of the home, especially if the borrower decides to live any longer in the house or in particular declining time. however, the borrower is not obligated to pay the exceed loan balance of the increasing home value.

In addition, the rule of reverse mortgage balance is varied from one country to another one depends on the law of the jurisdiction. Then, you can realize that reverse mortgage and the traditional one is truly different. Ordinary traditional mortgage place the homeowner as the one that has to pay the monthly payment to the lender, and it causes the increasing equity of the homeowner after each payment. Various comments come from regulators and economists. Some economists believe that reverse mortgage loan is beneficial for elder to smooth his or her income in the old days, so he or she can live in welfare situation. However, for regulators, reverse mortgage is kind of complex product of financial matter that not all consumers could understand well. Added with light misleading advertising that is often appearing in very tempting way, so many people are interested to have the reverse mortgage. It is better to seek a legal advicer before dealing with reverse mortgage loan because many consumers are not using the reverse mortgage for the positive. If you want to make any reverse mortgage, then you have to contact Reverse Mortgage Lenders Direct.

Are you dealing with a mortgage currently? What kind of mortgage type that you join right now? If you belongs to elder, why don’t you consider about having reverse mortgage? Many elder people lean their expectation in the old days on this mortgage type. They put their hope in this mortgage so they can enjoy the retirement smoothly without facing any financial problem. Yeah, it is true that before you are dealing with this mortgage, you have to know every single detail of the term.

What is reverse mortgage? Yeah, this is a special mortgage idea that lets the homeowner to borrow some money against the equity of the house. he or she will get total amount of money every month as the tax – free payment. He or she will always get it monthly till it reaches the total amount of the equity of the house added with interest. Once it meets the limit, then the homeowner should repay fully or give the house to the lender. Of course, the total of the equity depends on the condition of the house, so it is fair both for the borrower and the lender.

In other words, it is kind of loan which is retained to the title of the borrower’s house. in this type of mortgage, the borrower has no obligation to pay the monthly charge. The regulation is simple like once the borrower die or move from the house, then it becomes the right of the lender to take over the house. then, the lender later will sell the house to repay the loan which is given each month to the borrower. If there is any extra profit, it will be delivered to the borrower or his or her estate. There is also a lifetime reverse mortgage that allows the borrower to access the house without worrying to move in other estate. This financial aid is made for those poor people with limited cash and limited senior citizens. In the United States, people who are qualified for a lifetime reverse mortgage should be at least 62 years old, and it is different in United Kingdom that allows people in 55 to join the lifetime reverse mortgage.

It is clear that reverse mortgage is the one that ease people in retirement to anjoy easier life with cash flow without doing a thing as he or she has a house with equity. It is simply accepting some amount of money per month from certain lender, and you don’t need to move from your own house. in addition, there is no need for you to repay the cash as you stay at the house and keep it well maintained, so the equity of the house will increase or at least remain in balance. However,  the loan will be paid when you die by selling your house, and the lender is the one conducting the process.

Of course, there are some requirements to determine how much loan that you are qualified. It depends on your age, the equity of the house, the interest rate, and also the home value. The biggest and good house that you have with older age, you may get bigger amount of loan. You can decide whether you want to get the money in lumpsum or maybe you want it lines like credit flow with monthly payment, and you are even allowed to get the combination of both ways. The most important thing that you should consider before dealing with reverse mortgage is that every mortgage needs closing cost, and reverse mortgage requires more than any traditional mortgage. Therefore, it is better to think twice before you deep yourself into the type of mortgage. You can assess your house equity first, and make sure that it is worthwile to send yourself for reverse mortgage with the amount of home equity. Don’t make you suffer the skyrocketed closing cost at the end as your equity is beneath the closing cost itself. Instead of helped by the mortgage, it will be harmful for you as making debt to the lender. In this case, your house condition and equity become the most important thing to consider the most. So you can estimate whether it is beneficial or not to have reverse mortgage agreement.

Are shopping for a new house right now? Or maybe, you are planning to move out from your old one? Yeah, there are plenty of stuff that makes you stressful, and buying anew house is the biggest factor increasing your anxiety due to ill preparation. The question is why you should put yourself through all the stressful matter? You have to think just like a lender and learn yourself into the best to get your mortgage loan approved. In addition, there are several things that you should consider to get your mortgage loan approved.

The first that you should get into is knowing your credit score. It actually takes time to pullw your credit report to know your credit score. However, it is quite surprising to know that lots of future home buyers seem to neglect showing credit score as they are assuming that their credit score is high enough. They are even brave to apply for a home loan without attaching credit report as well as the score. In addition, there are also lots of people which are not considering about theft identity. However, low credit score and credit fraud are influential to stop the mortgage application dead on the track.

The most important thing to get your loan approved is by considering the credit scored and credit activty. According to Home Loan Learning Center, there is large percentage of lenders which require minimum credit score 680. If the score is below the minimum number, so the lenders will deny the applicatin for a conventional mortgage loan. Beside the high credit score, there are still many other factors that will determine whether you are qualified for a mortgage loan or not. They are several missed payments, derogatory credit information and frequent lateness. All of those factors will stop the process of approval because they mirror you are not qualified for mortgage loan. Therefore, if you deserve to get your application approved, you have to lower your debt, pay the bill on time, put the credit report on top. Clean credit history and fixed errors are the ways you can fast the approval.

In addition, the requirement to get a mortgage loan is often changed, so if you plan to get a home loan in the near time, it is better to well prepare certain amount of cash! In this case, you have to make sure that once you walk into a lender’s office, you bring lots of money so your application will be well accepted. In addition, some mortgage lenders are now cautious: thay put big awareness toward approved zero down mortgage loans, so they require a down payment.

Down payment minimum itself varies depended on various factors like the type of the loan and the lender. In addition, each lender has its own qualification of down payment, but the avarge of down payment is 3.5%. it is better to catch higher down payment just if you have the means. The higher down payment will knock down the mortgage balance as well as the private mortgage insurance. The lenders attach the payment to the property without adding 20% equity, but they pay the monthly private mortgage insurance. Therefore, if you get your private mortgage payment down, you will enjoy a lower and affordable mortgage payment. However, it is not only the down payment that you should aware of because there are still many other expenses that you should understand well. If you deal with a mortgage, you will also deal with home inspections, closing cost, home appraisals, credit report fees, title searches, application fees and still some others. In this case, the closing cost range from 3% to 5% of the mortgage balance, and it should be paid to the lender before you get the mortgage approved.

Furthermore, staying on the job is the best way to deal with a mortgage approval. Closing mortgage loan after quiting a job will cause big amount of money to close the loan. Of course, it causes you to lose big deal on your mortgage balance. Therefore, to stick to your latest company is the best way to get though on home buying process. Any small change on your income even employement will be influential to the morgage process.

How to get rid of mortgage insurance? A home buyer who is unable to put 20% Down Payment can expect to purchase a private mortgage insurance (PMI) per month. According to a publisher of one of financial magazine, PMI needs to avoid and if you have involved into such mortgage insurance, you have to monitor it. Mortgage insurance premiums are included in mortgage payment and they are calculated based on amount of your Down Payment. Type and amount of loan and also the borrowers’ credit scores are also considered. Before 2007, it is easier to cancel or to avoid PMI, but today the rules have been tighter. That’s why the insurance users are harder to avoid now.  

Lenders think that they are riskier and want to have good insurance to protect themselves when their borrowers cannot pay back the loans. Several programs are done by the borrowers to reduce the Down Payment requirement; but those are only the expectations. For those that cannot afford to purchase 20% Down Payment and do not want to purchase OMI, there are some alternative you must try.

Using a piggy-back loan is the first recommended one. This loan can help the borrowers to put 10% Down Payment and take two loans altogether in which the first loan is less than or being at 80% of property value. What about the second loan? The second loan is used to cover remaining 10%. The second scenario shows the borrowers may get the interest rate on their second loan that is less than the first loan. But, if the rate increases, this movement may not affect the financial sense.

Payments on piggy-back loan may be lower, but in some cases, PMI and mortgage may be cheaper than piggy-back payments. This makes you, the borrower, to need much more discuss to your lender to see the best one that’s most sense.

Second alternative is by having mortgage without PMI. In most recent, many housing agents in several states offer a new service of mortgage without PMI. It’s very interesting and needs to try, especially for the first-time home buyers who do not have enough Down Payments.

Having one-time upfront payment for mortgage insurance is also recommended to avoid private mortgage insurance payments. This idea seems more popular and has implemented by a lot of people in these days. But, you need lump sum of money to pay at closing and even pay for home loan. For getting perfect financial situation, a home buyer will be assisted by a seller for taking care of his/ her lump sum of money. This idea is effective to remove PMI.

What about the home buyer who have already involved in mortgage with PMI? The easiest solution to get off his/ her PMI payments is by increasing the equity on home or seeing the home/ property increase on its value.

The last alternative is by letting the equity up. This will happen if the property/ home value has not gone up and a home buyer pays larger payments that can bring the home equity value up. If this happens, the lender will waive PMI payments.

Taken from another source, there are several simple solutions to cancel PMI and here are the points:

  1. By canceling your PMI by using this ideas:
  2. Start to get a new appraisal

Most of lenders will consider the new appraisal instead of appraised value or original sales price when they decide whether you have met 20% equity. A new appraisal commonly costs from $300 to $500.

  • Do pre-pay your loan
  • Remodel your home

Home remodeling is the instant way to increase your home value. Then, ask your lender to re-calculate your LTV ratio by using your new home figure.

  • Know your rights

You have to know the closing event like how many months or years it will make you to pay out your loan. Mortgage servicer must also give you annual statement that presents whom should call when you need actual information about PMI cancellation.

  • Have these requirements:
  • PMI cancellation in writing
  • Good payment history
  • There are no any liens on home, like home equity line of credit, home equity loan, etc

An appraisal that shows your loan balance is not more than 80% of total value of property/ home

Definition

What is Private Mortgage Insurance may become the most common question is on your mind who are really don’t know about mortgage insurance or other sorts related to mortgage payments. Private mortgage insurance (PMI) is a type of mortgage insurance which is obtained from an insurance company. The mortgage insurance is required as the lender’s financial protection after the borrower takes conventional loans for buying home or other properties. Like other mortgage insurance policies, Private Mortgage Insurance gives the warranty to the lender if the borrower stops paying home loan. The mortgage is arranged by a lender and provided by a private insurance company. If you are interested in having such mortgage insurance, you must deal with monthly mortgage payments plus other financial obligatory like property tax,  principal, homeowner insurance, interest, and many others. Doing PMI payments regularly doesn’t build equity on your home.

Things Should Know about Private Mortgage Insurance

The lenders make the borrowers who have less than 20% to put down on a home purchase. Private Mortgage Insurance is offered to borrowers to protect the lenders if the borrowers are unable to purchase their mortgage. In the other side, the mortgage guarantees the lender will keep getting paid if the borrower defaults on loan. Both the lender and borrower get the benefit from this mortgage service. With having private mortgage insurance, it allows you to pay out your dream home even though you just have less than 20% Down Payment. Well, here are several things you need to know related to PMI.

Types of PMI

Basically, there are two main types of PMI: PMI from government which is called Mortgage Insurance Premiums (MIP) and Private Mortgage Insurance with conventional loans. Both are totally different, especially for the services. Mortgage Insurance designed by government is completed with VA loans or FHA, while Mortgage Insurance with conventional loans is provided by private sector. MIP with VA loans and FHA are implemented differently and both are managed in more internal scope than private mortgage insurance. Each type also has different sets of rule.

Who is called as the borrower or who does need to have PMI?

On the conventional loan, if your Down Payment is less than 20 percent of total value of your home, your lender officer will ask you to join private mortgage insurance. You will keep paying your mortgage insurance payments until your reach the adequate equity on your home to have a LTV ratio. LTV ratio is sum of money you borrow then it is divided by home value you bought. A standard equity is 80% of home value.

How Much Does PMI Cost?

PMI cost varies, depending on your Down Payment or credit scores. A lower Down Payment or credit score, a higher mortgage insurance premium you must pay per month. Generally, the ranges of private mortgage insurance start from $30 to $70 per month for a $100,000 loan. From this, it can be said that if you buy a home on value of $300,000, the payment you must purchase is about $150 per month.

Little bit different to conventional private mortgage insurance provided by private sectors, FHA loan adds upfront MIP plus annual premium which must be paid monthly. VA loan has different rule about the premium. It has the upfront fee/ funding fee but no monthly or annual premiums.

When Does the Borrower Pay PMI Premiums?

The time when you should pay your PMI premiums will depend on the policy you’ve selected. But generally, PMI premiums are paid monthly along with mortgage payment. Your lender may have special policy that lets you to pay PMI premiums on lump sum either in cash money at closing.

Why Does the Borrower Need PMI Policy? PMI reduces or minimizes the risk may occur to the lenders when they offer the conventional loans to the borrowers. The equity on a home will help to pay the loan balance if the borrower defaults on loan. The lender will keep getting profit even though the borrower no longer makes payments on his/ her home. PMI gives the safeguard to the lender, not the borrower. If you fall down behind on your payments and mortgage payments, you can lose your home or your credit scores can suffer.