Since the early of 1960s, reverse mortgage has been around of the world although the financial loan is dominated by insurance. In 1988, reverse mortgage gets it law in the American Congress, and in 2000 the congress was approved with an absolute limit of the origination fees and refinancing reforms. It is likely that the legislator realize how people in retirement live in a luxurious house but having low income in the old days. The general customers of reverse mortgage  are those active people who want to spend the whole live in the house, and they need more cash to live their life as well as to give bit renovation to the house. as the need of real estate and health care increase, then the mortgage reverse is also skyrocketed since 1990.

It is true that the interest of reverse mortgage has been doubled in 2002, and some believe that many people joining this mortgage reverse because they want to make it as ATM machine. Some borrowers might think that you are only allowed to use the money for medical or housing costs. However, everything depends on the source of the loan anyway. According to FHA, You are allowed to spend the money for any purpose, so there is no limitation of what kind of matters you can deal with it. Therefore, it is better to reconsider if you want to invest your cash on risky investment that later when the stock goes lower you will lose your cash as well as your home equity. In addition, if you want to gain more interest in bank account by saving all of the money there, you have to think twice. Of course, you don’t want to lose social cesurity and medical benefits, therefore, it is better to not invest all of them in bank because it will impact the public programs like medicaid.

In addition, you have to know that reverse mortgage is not for everyone. You have to understand some terms related to the program is you don’t want to be trapped with risky condition. Closing costs in mortgage is sometimes higher rather than your equity or even any other traditional mortgage. In this mortgage, home equity is in line with the credit. Therefore, if you are planning to sell the house in the next few years, it is better to not join the reverse mortgage because it will just blow up your outcome. Furthermore, you have to know that reverse mortgage is also unwise to leave the house for your children because the the sale of the house is the loan that you have to pay. Moreover, a reverse mortgage is the one which is hard to understand compared to traditional mortgage. Therefore, anybody deserving to join the mortgage should ask for third party companion to consult the prior. There are so many terms that are difficult to understand, and only professional will give the best explanation.

Then, who are qualified for reverse mortgage? Yeah, people in the age of 62 or more are the ones qualified for the reverse mortgage, and they don’t  have any income in the retirement. There is also no credit check or medical exam to in line with the regulation. In addition, the amount of the loan depends on the age of the borrower, appraisal of the house and also current interest rate and current lending limit area. Therefore, older homeowners are allowed to have higher loan with lower interest rate if they are presumably get the loan shorter. Once dealing with refinancing, it means that you have to get a new loan, and if you still defence the original one, the new loan will go to pay the debt of the old one.

Related to the payment options, it varies from one lender to another one. One prefers to get the money in a lump sum while the others prefer to have it fixed monthly. There are tenure plan and term plan. Tenure plan is a payment option that lets the borrower to ask for money in fixed amount as long as the homeowner becomes the principle of the residence. A term plan provides fixed payment for a period of selected months. Opening a line of credit will be easier to combine with tenure or term plan.

Private Mortgage Insurance (PMI) is a kind of mortgage insurance which is used altogether with conventional loans. Similar to other mortgage insurances, PMI gives the protection to lender, not the client, when the client stops doing payment of client’s loan. PMI itself is organized by the lender and it is provided by the private insurance companies. People commonly require PMI when they have conventional loan and do down payment less than twenty percent of total home price. PMI is also required if the equity is less than twenty percent of the total of home value. You can avoid PMI if you save up your money for paying down a 20 percent down payment. If you can’t, the lender will ask you to secure PMI prior to sign off your loan. The insurance company’s goal is to give best protection to mortgage company when you default the note.

PMI sounds a great choice especially for the new homeowners. They can buy a house without requiring to save up the cash for paying. Yes, sometimes this is the only way and even the best way for the new home buyers. Yet, there are some reasons why the new home buyers need to avoid such kind of insurance. To know more the reasons, just read the following information.

  • Cost

Private Mortgage Insurance commonly has cost of rate at 0,5-1 percent of the total amount of loan. A $100.000 loan means a homeowner would be paying $1,000 per year ($100,000 x 1%) or $83,33 per month ($100,000/12). When the house value changes, the homeowner might be paying more than $83,33 per month (depending on actual house value).

  • Not be deductible

Private Mortgage Insurance is included as a deductible tax, but only if a married tax payer has earned less than $110,000 for a year. For a married couple that fills it separately, the threshold is about $55,000. There is a rumor that this threshold could be raised for next years, but there is no warranty that it will happen. Many homeowners prefer paying down larger payment to paying down the threshold since they will feel peace on their mind that the loan’s interest is deductible.

  • The heirs will be nothing

Most PMI users believe that their kids and spouse will receive a sort of financial compensation when the users die. This is not true. The institution or company is taking the benefits of such policy. The compensation won’t pay directly to the heirs. If the heirs want to be protected and provided some of money for supporting their living expenses after your death, it‘s needed another or separated insurance policy. Don’t have a thought that PMI will be ready to help the clients’ heirs, but only the mortgage lender.

  • Hard to be canceled

When the client has the equity up to 20%, she or he doesn’t need to pay PMI anymore. Yet, getting rid of the monthly burden is not simply easy. Most lenders need their clients to draft the letter containing of PMI cancelation. And this takes several months to process it depending on the lenders.

  • Payment goes on and always on

One more issue about the lender and PMI is some lenders ask their clients to maintain PMI contract for a certain period. Even if the clients have met 20% threshold, they might still be obligated to paying for their mortgage insurance. So, it’s crucial to re-read the printed PMI contract in more details before being signed.

  • Running money away

The clients who haven’t met 20% of purchase price yet, they have to pay their mortgage insurance until their total equity of house at least 20%. This can take some years and during those years, they keep paying the mortgage insurance. This is literally running amounts of money away for years. Then, how to avoid Private Mortgage Insurance (PMI)? In particular situation, a PMI can be avoided by using piggy-back mortgage. The following illustration may make you understand more about this case. You want to purchase $200,000 for a new house, for instance, but your cash is only 10% of total of purchase-price (not enough to avoid Private Mortgage Insurance). By using an 80/10/10 agreement, you now can take the loan out with a total 80% of the house value. This second loan is then called as a piggy-back loan. With splitting up loans, you may have the capability of deducting the interest for both loans and avoiding PMI as well.

Holding a mortgage agreement is really helpful to deal with your current financial problem. However, sometimes, you need to reconsider any other things that are more beneficial rather than to engage with mortgage for a long time. yeah, there is a chance for you to get some lumpsum from your mortgage agreement. Refinancing is the best idea to transform the agreement into a certain amount of money. you can refinance your mortgage if you are sure that it will save you money and of course makes your financial balance. Below are some tips to determine whether you need to refinance the mortgage or not.

The first thing that you should know about mortgage refinance is that there are two types of refinances. The first type is rate and term refinancing. This is a typical of mortgage refinance that allows you to refinance the current balance mortgage for lower interest rate and of course with terms which are affordable for you. the term should be the length of the time that you will make the loan finish. The second type of refinancing is cash out refinancing. In this type of refinancing, you can make new mortgage agreement which is bigger than the owe that you have. You can make the loan to repay the old loan or you can take the difference cash. Yeah, it is quite complicated to deal with mortgage yourself, so it is better to have an advisor or attorney to help you getting the biggest deal.

There are various factors why people are willingly to refinance their mortgage. It maybe cause by the expectation to replace the adjustable rate mortgage with fixed loan, and some people choose the way to settle a divorce or to reduce the FHA mortgage insurance. However, one thing that you should aware of, it is the refinance rate that will come over thousand dollars. Therefore, it is better to always check the current mortgage refinancing rate.

Talking about refinancing means that you have to renew or close the mortgage agreement. Do you know how much money that you will spend to do it? You cannot underestimate the cost of closing agreement. It is pricey which is almost to thousand dollars just to pay the lender for closing fee. In addition, you may need to hire an attorney that will help you achieving the best deal and many other processes which also require money. therefore, with its thousand dollars fee to refinance your mortgage, you have to make sure that your refinancing is make sense. In this case, calculating the break even point becomes the best strategy to get the estimation whether your refinancing is worthwile or not. I can recommend you to stay still at the agreement if you want to leave the house less than the break even time.

Do you realize that long term mortgage cost more money in the long run, for instance the one with 30 years term. Therefore, to save you more money, assuring your credit with good score is the best way. I can tell that good credit makes thousand dollars in the mortgage. Further, if you prefer to cash out refinance, you have to reconsider the pros and cons. It is usually made for paying the former debt. If you are paying the debt with the new loan from the cash out refinance, you can lower the interest rate on the credit card debt. In the contrary, you will take a lot more money to pay the balance rate of the mortgage if you take it up to 30 years. There is also one thing that you have to aware of the most. It is too ricky to transform unsecured debt into an secured debt. You will miss your credit card payment, and the debt collector will call you with nasty manner informing your bad credit score. In addition, miss mortgage payment will make you losing your house foreclosure. You have to know that home equity debt which is added with refinanced mortgage cost will always securing debt. After all of the explanation, do you still plan to refinance your mortgage? If yes, then you should reconsider any single details of the factors, so you will not suffer from the debt!

Do you have any plan to deal with a mortgage company currently? If so, have you known anything about mortgage? Are you ready with the monthly payment with all the income that you have? Yeah, there are so many things that are awaiting ahead you before engaging to a mortgage company. It is better to know all the stuff related to mortgage loan before you deep into it because some are confusing and not easy to understand. One of the matters that you should know earlier is pre-approved mortgage. Do you know the meaning of a pre-approved mortgage?

Pre approved mortgage or mortgage pre approval is usually a written statement from a lender to a borrower that says about the preliminary determination which the borrower should qualify for a certain total amount of loan under the lender guideline. So, it is only the preliminary statement in the written form that explains how much of loan that you are qualified under certain lender guidance. Usually, the amount of the loan that is qualified for you based on your income and credit information. In some cases, most pre approval letters are good for 80 – 90 days.

Then, you may question yourself about how to get a letter of pre approval. Then, you can seek it on the internet because you can find so many local lenders via online. Then, the lenders will consider and assess everything related to the information that you give like your bank account, credit, income and other asset. After all the review made, the lender is usually will make a preliminery written statement saying the best qualification for you with all of the qualification that you have.

In addition, if you wonder whether a pre approval will guarantee a loan or not, below we will discuss it! The answer is simply no. For example, if you are connected to a local lender via internet and you have already gotten a pre approval letter, you are not dealing with any loan with the lender and of course you are not into any term of loan even specific rate. Instead of only a pre approval, a lender usually requires you to add some other documents and information like asset verification as well as any satisfaction of your condition to extend you a loan. Instead, pre approval letter means to be the subject of cancellation or modification if any change occurs in your condition, so it influences your financial situation. In short, a pre approval letter is not the one that guarantee specific term or rate, it is also not the one offering to lend also not the one marking commitment on a loan. In addition, filling the form of the questionaire in the internet is not an act to propose for a credit. The most important thing is that this letter doesn’t guarantee that the home you offer is accepted by a seller because it is just a preliminary review knowing your qualification. Then, why everyone should have dealed with pre approved before engaging to a mortgage? There  are several reasons why you have to deal with this pre approval. The most important reason is that your qualification is estimated, so you can understand of how much rate or home cost that you can afford with your income. It is helpful to limit the target house that you are looking for to only shoot the one in the range of your capable rate. In addition, a pre approval letter is also beneficial to show to real estate agents or sellers that you are capable to pay the price of the house that you are going to buy. Although it doesn’t guarantee you that the sellers will accept you as te buyer, but a pre approval letter is helpful as they usually will ask you to submit it for preliminary review. In other words, a pre approval letter will make you stand out in real estate market, especially if the letter says you are in good qualification with good credit review and high income. It can be said that a person with a pre approval letter is stronger in the market compared to the one without it, and some sellers will respond to your offer seriously with a pre approval letter.

Are you interested to deal with any mortgage this year? What kind of mortgage that you are interested the most? Have you prepared any qualification dealing with it? Yeah, dealing with mortgage product is not that simple. It requires deep understanding, so you can take the positive benefit rather than the risk. Talking about mortgage, you have to deal with prequalifying. Do you know what is meant by the term? Once you are visiting for a mortgage broker or mortgage loan, the realtor may direct you for the saver way. Yeah, realtor is the one that will help you to get the greatest sale, it is also the one leading you with best qualification with its own way, and it is also the one that will ease the purchasing or selling of your property. Even you will got plenty of advice, still you can select them and take only the best one suitable for you. below are some tips that are beneficial for you to deal with prequalify mortgage:

The first thing that you should consider before engaged to a mortgage lender, you have to compare lenders based on the annual percentage rate. It is the greatest way for you to deal with APR  because it will show you the total amount of a loan. It is also helpful to know the rate of your loan that will be charged by the bank. In addition, you will also told about some cost, especially additional cost, that you have to pay later to get the rate. It can be mortgage point, discount, and also lenders origination fees. In some cases, others’ recommendation is worth to consider like the one coming from your family, friends and even real estate agents. Any other institutions that you can visit is local bank branch, savings institutions, and also credit union and even morgage company.

There are also several questions that you have to ask to yourself in order to weigh your loan option and mortgage lenders. The first question is whether you are in relationship with the lender or not. Then, you have to know the service level of the lender. Accessing your account, bill and getting help are important for you, so you have to think about it as well. Then, knowing that the lenders will offer various loan options is also important for you. then, assessing all the program which is suitable for you is also essential. The origination fees of the lender charge is also worth to consider before dealing with a mortgage.

Further, to figure out how much that you are qualified to borrow from a mortgage company, it is better to be prequalified or conditionally approved. In this case, prequalification can estimate of how much you can borrow based on the eployment, income, and credit also bank account information. Being prepared before engaging to certain loan is the best way to run the process of home buying in smooth run. Therefore, getting prequalified means that you can choose and consider again what kind of mortgage program that suits you and how much money that you can owe from a lender. In addition, prequalification is important to give you big advantage of your house hunt, and it helps you preparing your budget to achieve your expectation so your position to negotiate with the seller is getting stronger.

So, in short, prequalification is the estimation of how much that you can borrow from a mortgage lender. It provides you the estimation of your power to borrow certain amount of money. the estimation is made according to your income, credit, bank account and other assets. Sometimes, you can make your own prequalification via online. In addition, at the most important thing is that many lenders offer a prequalification mortgage free without cost. It is not appropriate to call a prequalification as a preapproval or a commitment to lend because you still have to add another additional information to get a loan. The reason of getting a prequalification is simply to make you comfortable paying the monthly payment with your income rate and credit also other assets. The benefit doesn’t top on the estimation of the amount of the loan, but it also covers the best type fits you and your income.