Buying Mortgages Online
Mortgages: Questions and Answers
Here are some basic questions and answers about buying Mortgages and property over the Internet.
Mortgage Services FAQ with Mortfacts
Reverse Mortgages FAQ with SEA
1. Is mortgage insurance a good idea?
No, it is a very bad idea. Mortgage insurance is nothing more than decreasing term insurance, the most expensive insurance you can buy. The cost remains the same while the insurance protection goes down every year. The cost per 1000 of insurance coverage increases in direct proportion to the decrease in your mortgage balance. Once you buy this product, the premium remains the same even though your mortgage decreases each month. Imagine the cost during the last year of your loan. This is why most people who are sold this product cancel it when they realize what the insurance is really costing them. If you want to protect your mortgage in case of an untimely death, a better idea is to buy 10 year level term insurance and then decrease it commensurate with your reduced mortgage balance. This is a much more efficient way to protect your home.2. What is an umbrella liability insurance policy?
Umbrella liability policies provide additional liability coverage to your automobile and homeowner’s policies. They also help cover you for legal costs and liabilities that are not included under other policies. Ask your property and casualty insurance agent for the cost of this often overlooked item. You will be surprised at the low cost of this much needed added protection.3. What is a reverse mortgage?
Homeowners 62 and older who have paid off their mortgages or have only small mortgage balances remaining are eligible to participate in HUD's reverse mortgage program. The program allows homeowners to borrow against the equity in their homes.Homeowners can receive payments in a lump sum, on a monthly basis (for a fixed term or for as long as they live in the home), or on an occasional basis as a line of credit. Homeowners whose circumstances change can restructure their payment options.
Unlike ordinary home equity loans, a HUD reverse mortgage does not require repayment as long as the borrower lives in the home. Lenders recover their principal, plus interest, when the home is sold or refinanced by the heirs. The remaining value of the home goes to the homeowner or to his or her survivors. If the sales proceeds are insufficient to pay the amount owed, HUD will pay the lender the amount of the shortfall. The Federal Housing Administration, which is part of HUD, collects an insurance premium from all borrowers to provide this coverage.
The size of reverse mortgage loans is determined by the borrower's age, the interest rate, and the home's value. The older a borrower, the larger the percentage of the home's value that can be borrowed.
For example, based on a loan at today's low interest rates, a 65-year-old could borrow up to 60 percent of the home's value, a 75-year-old could borrow up to 70 percent of the home's value, and an 85-year-old could borrow almost to 80 percent of the home's appraised value --- up to the FHA loan limit for each city and county."
There are no asset or income limitations on borrowers receiving HUD's reverse mortgages.
There are also no limits on the value of homes qualifying for a HUD reverse mortgage. However, the amount that may be borrowed is capped by the maximum FHA loan limit for each city and county varies from $154,896 in rural areas to $280,749 in many major metropolitan areas (and even higher in Alaska, Hawaii & the U.S. Virgin Islands) depending on local housing costs."
HUD's reverse mortgage program collects funds from insurance premiums charged to borrowers. Senior citizens are charged 2 percent of the home's value as an up-front payment plus one-half percent on the loan balance each year. These amounts are usually paid by the lender and charged to the borrower's principal balance.
FHA's mortgage insurance guarantees to the borrowers that they will continue to receive their loan proceeds even if the Lender goes bankrupt. The FHA insurance also guarantees Lenders that they will get their money back with interest and fees even if the homeowners outlive the longevity tables or the property values decrease. Thus while the FHA mortgage insurance increases the initial cost of getting a HECM reverse mortgage, it also allows the Lenders to sell HECM reverse mortgages at interest rates well below those of FannieMae and Homeowners 62 and older who have paid off their mortgages or have only small mortgage balances remaining are eligible to participate in HUD's reverse mortgage program. The program allows homeowners to borrow against the equity in their homes.
Homeowners can receive payments in a lump sum, on a monthly basis (for a fixed term or for as long as they live in the home), or on an occasional basis as a line of credit. Homeowners whose circumstances change can restructure their payment options.
4. Is a Mortgage REIT a good idea?
Yes, indeed it is. These vehicles are extremely liquid and work very much like a real estate mortgage mutual funds. Recently Mortgage REITS returned 53.69% vs. 32.50% for Equity REITS according to the National Assn. of Real Estate Investment Trusts.5. What is the current ceiling on conforming mortgage loans in most major metropolitan areas?
Recently it was $322,700, above which it becomes a jumbo loan with higher interest costs.
Recommended Mortgage Websites
Mortgage
101 - Find low home loan mortgage interest rates from hundreds of mortgage
companies! Includes mortgage loan payment calculator, refinance, mortgage rate, refinance news and calculator, and mortgage lender directory. Our mortgage calculators and live mortgage interest rates help connect you to local mortgage lenders
Interest.com -
Search mortgage rates in your local area. Find and compare today's interest rates and mortgage home loans that suit your home buying needs. Learn more through our mortgage calculators, new and articles.
Reviewed Mortgage Sites on the Internet
Morfacts
- www.morfacts.com/
San Diego Mortgage Broker
established in 1989. Morfacts Mortgage Center is committed to helping clients find the best mortgage financing with the most competitive terms in the market.
SEA
Reverse Mortgage - srequityaccess.morfacts.com/
Senior Equity Access Group assists senior citizens gain access to the equity in their homes
through a Reverse Mortgage to secure their financial independence.
Visit our Shopping Guides and Credit Card Fraud sections for useful information.
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