Is a Reverse Mortgage Right for Me?

When you’re headed into retirement and planning for an income change, the idea of taking on a new mortgage can be intimidating. However, there is an option that might work better for you. A reverse mortgage is a special type of home loan for those aged 62 and up that does not require monthly mortgage payments. The loan is repaid after the death of the homeowner(s).

 When should I consider a reverse mortgage?

A reverse mortgage is not for everyone. It is best suited for those who can afford to maintain their home and do not plan to move. Some people use their loan to pay off home improvements or to supplement income upon retirement. Another popular use for a reverse mortgage is to purchase a second home, either to vacation in or to rent out to tenants for extra income. There is no restriction on how the funds can be used, only how much will be lent to the borrower.

What are the criteria to qualify for a reverse mortgage?

When applying for a reverse mortgage, the following factors will be considered:

•          Your current age
•          What type of reverse mortgage you want
•          The appraised value of your home
•          Current interest rates
•          Financial assessment of your ability to pay and maintain all homeowner expenses, such as insurance, property taxes, and regular maintenance

Of course, there are other factors that play into your eligibility to qualify for a reverse mortgage, but these are the most common based on standard mortgage lenders.

If you’re looking to supplement your income, this is one very effective way to do it, while making sure your home is still covered. Contact Mortgage Investors Group today and we can help you get the best loan for your home.

Here’s What You Need to Know about Applying for a Home Loan in 2016

Information for the 2016 Home Loan

Regarding the unique aspects of the year 2016 in relation to shopping for a new home, there are a few things worthy of note. Mortgage lenders this year are expected to ease their standards for credit requirements compared to the previous year. Conventional mortgages are becoming open to a larger range of credit scores, and besides that the FHA and VA type loans have always been the first option for those wanting a loan with no down payment (for those who qualify).

When you are getting ready to apply for a loan, you’ll want to do a few things:

1.       Manage your credit and get it to a place where you can be approved for the best options available (pay down debt, obtain your credit score, iron out any inconsistencies, etc.)

2.       Prepare for the down payment and closing costs as well as homeowner’s insurance fees by increasing your savings

3.       Start preparing for a pre-approval by calculating how much your debt to income ratio is and how much you’ll be able to afford for monthly mortgage payments

These simple steps will greatly help in achieving a smooth application process!

Exploring Your Options

While you are making the decision for what type of loan you want to apply for, let MortgageInvestors Group help you choose the best fit for your situation. Besides helping you compare the different down payment amounts required for each loan, and varying interest rates and types of interest rates, a mortgage lender can introduce you to some of the key advantages of every type of loan in the ever-increasing mortgage market. Explore your options thoroughly and it will pay off in the end.

How is my Monthly Mortgage Payment Applied to my Mortgage Loan?

How a Mortgage Payment Works

The effects that your money has when it is delivered to your mortgage lender to pay off a loan can be quite confusing. For the homeowner who is seeking to understand just a little bit more about the way that their mortgage payment works, especially if you are seeking ways to pay off your loan early to minimize the amount paid in interest over the life of the loan, here I will try to simplify the matter.

Because mortgages are such long-term loans, the charged interest works a little differently. The mortgage amount owed is the amount that the interest is applied for. For instance, if you owe $300,000, you will pay interest on $300,000. But as you pay down the loan, the amount paid toward interest drops (a 4.5% interest rate for $250,000 is less than for $300,000). Now because your monthly mortgage payment remains pretty much the same, whenever you have less interest to pay for, more can go toward your principle. The nature of the mortgage loan repayment method leads to an imbalance of your monthly dues going toward interest starting out, and then shifting toward the end to being applied more for the principle.

Paying Off Your Mortgage Early

There are many kinds of advice given to people trying to pay off their mortgage early. The benefits of repaying a mortgage early are made manifest by less interest paid overall and the freeing up of income that can be used in other capacities. The ideal option, though, it appears, is to pay in extra money every month above what is charged by your mortgage lender. This leads to less principle owed, and therefore less amount to be charged interest. Talk to your mortgage lender for specific information on how to pay off the mortgage early in the most effective manner.

How a Mortgage Payment Works

The effects that your money has when it is delivered to your mortgage lender to pay off a loan can be quite confusing. For the homeowner who is seeking to understand just a little bit more about the way that their mortgage payment works, especially if you are seeking ways to pay off your loan early to minimize the amount paid in interest over the life of the loan, here I will try to simplify the matter.

Because mortgages are such long-term loans, the charged interest works a little differently. The mortgage amount owed is the amount that the interest is applied for. For instance, if you owe $300,000, you will pay interest on $300,000. But as you pay down the loan, the amount paid toward interest drops (a 4.5% interest rate for $250,000 is less than for $300,000). Now because your monthly mortgage payment remains pretty much the same, whenever you have less interest to pay for, more can go toward your principle. The nature of the mortgage loan repayment method leads to an imbalance of your monthly dues going toward interest starting out, and then shifting toward the end to being applied more for the principle.

Paying Off Your Mortgage Early

There are many kinds of advice given to people trying to pay off their mortgage early. The benefits of repaying a mortgage early are made manifest by less interest paid overall and the freeing up of income that can be used in other capacities. The ideal option, though, it appears, is to pay in extra money every month above what is charged by your mortgage lender. This leads to less principle owed, and therefore less amount to be charged interest. Talk to a professional mortgage lender like Mortgage Investors Group for specific information on how to pay off the mortgage early in the most effective manner.

Mortgage Insurance

PMI and MIP

Mortgage insurance is commonly added onto a mortgage loan to reduce a mortgage lender’s risk. It can bring lower interest rates and cause you not to have to pay so much in your down payment. There are two different types of mortgage insurance, Private Mortgage Insurance (PMI) and Mortgage Insurance Premium (MIP).

Private Mortgage Insurance is applied only to conventional loans in the case of a down payment less than 20%. PMI is generally worked in as an addition to your mortgage loan payment every month. But a PMI may be cancelled once you reach 20% in equity if you have a good payment history.

Another type of PMI is the single premium PMI where the insurance premium is paid in an upfront, single lump sum. This gets the insurance all taken care of in one swoop. And lastly is what is called the lender-paid PMI where the cost is put in the interest rate for the entire life of the loan.

Mortgage Insurance Premium on the other hand is insurance attached to any FHA loans. The FHA requires this insurance to reduce risk and allow for low down payments. MIP is usually assessed as both an upfront cost and monthly payments until a sufficient amount of the loan has been repaid.

Do You Need Mortgage Insurance?

Mortgage insurance is only needed when a home buyer is unable to put 20% down payment on a home loan. In these cases it is required by either the government or the mortgage lender until that 20% mark has been reached.
 

What Are Mortgage Points?

Lowering Your Interest Rate

Mortgagepoints are the currency of the system designed to give you the option of making an advance payment on the interest of a mortgage to lower your monthly interest rate. These points are also called discount points. Each point is equal to 1% of the loan amount.

These discount points benefit those who are planning on staying in their home for a long period of time. The amount of prepaid interest that is paid through the points discounts the amount of interest paid over time. For example, if you have a 30-year $200,000 mortgage with an interest rate of 4%, and you pay for 2 discount mortgage points that decrease your interest rate by 0.4%, then you would save $2,185 over 10 years.

Whether it is beneficial for you to pay for mortgage points depends ultimately on how many years you plan to stay in your new home and how much available cash you have after origination fees and closing costs. Your break even point will be based off of interest rates and the amount of the loan. It is also advised to only buy points if you’re selecting a fixed-rate mortgage, and not an ARM.

Getting Help Paying for Points

Sometimes new home developers and sellers of homes have the ability to help pay for your points in order to incentivize you to purchase. You may be able to negotiate with them to save cash for other closing and moving costs. Speak with our professionals at Mortgage Investors Group to verify any third party contributions, as there are defined guidelines for this process.