| 1. |
How do I know how much house I can afford? Answer |
| 2. |
How do I know which type of mortgage is best for me? Answer |
| 3. |
What is a Reverse Mortgage? Answer |
| 4. |
How do I qualify for a Reverse Mortgage? Answer |
| 5. |
Are there different types of Reverse Mortgages? Answer |
| 6. |
How does the Reverse Mortgage get paid back? Answer |
| 7. |
What are the costs of a Reverse Mortgage? Answer |
| 8. |
How much money can I get with a Reverse Mortgage? Answer |
| 9. |
How do I receive my money with a Reverse Mortgage? Answer |
| 10. |
Can my current income influence my ability to get a Reverse Mortgage?
Answer |
| 11. |
Can I refinance a Reverse Mortgage, as I would be able to do with a traditional home mortgage?
Answer |
| 12. |
If I still owe money on a first or second mortgage, can I still get a Reverse Mortgage?
Answer |
| 13. |
How can I learn more about a Reverse Mortgage and if it's right for my situation? Answer |
| 14. |
What is the difference between a fixed-rate loan and an adjustable-rate loan? Answer |
| 15. |
How is an index and margin used in an ARM? Answer |
| 16. |
What does my mortgage payment include? Answer |
| 17. |
How much cash will I need to purchase a home? Answer |
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Q
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How do I know how much house I can afford? |
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A
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Generally speaking, you can purchase a home with a value of two or three times your annual household income. However, the amount that you can borrow will also depend upon your employment history, credit history, current savings and debts, and the amount of down payment you are willing to make. You may also be able to take advantage of special loan programs for first time buyers to purchase a home with a higher value. Give us a call, and we can help you determine exactly how much you can afford. |
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Q
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How do I know which type of mortgage is best for me? |
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A
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There is no simple formula to determine the type of mortgage that is best for you. This choice depends on a number of factors, including your current financial picture and how long you intend to keep your house. Essex Mortgage Lenders can help you evaluate your choices and help you make the most appropriate decision. |
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Q
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What is a Reverse Mortgage? |
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A
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A Reverse Mortgage is a product designed for homeowners age 62+ that turns the equity in their home into cash that can be used for any purpose. Enjoy lifetime use of your home without the monthly payments. |
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Q
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How do I qualify for a Reverse Mortgage? |
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A
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You and any co-borrower must be at least 62 years old and own a home that is your primary residence. It does not have to be paid off to qualify. There are no income requirements or credit restrictions. Loan amounts are capped based on the loan type and the county you live in. |
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Q
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Are there different types of Reverse Mortgages? |
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A
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Yes, but the most popular is the FHA-Insured Home Equity Conversion Mortgage, which is also known as a HECM. |
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Q
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How does the Reverse Mortgage get paid back? |
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A
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The Reverse Mortgage must be repaid when the last owner permanently leaves the residence or sells the property. In the event that you pass on, your estate has the choice of keeping the house by refinancing the loan with a conventional mortgage or selling the house and using the proceeds to payoff the Reverse Mortgage. |
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Q
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What are the costs of a Reverse Mortgage? |
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A
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Closing costs and fees are the same as for conventional loan with the addition of a fee for the FHA Insurance that makes this mortgage a safe product. Closing costs include the appraisal fee, title insurance, origination and recording fees along with the customary expenses.
All closing costs can be funded through the Reverse Mortgage so the only out of pocket expense is the house appraisal and counseling. |
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Q
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How much money can I get with a Reverse Mortgage? |
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The amount of money is determined by:
The age of the borrowers. The value of the home. Current interest rates. The program you select. The maximum lending limit for your area.
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Q
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How do I receive my money with a Reverse Mortgage? |
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There are several ways depending on your needs:
Lump sum payout. Monthly payments for as long as you live in the home. Monthly payments for a fixed number of years. A line of credit you can draw upon. A combination of all choices. |
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Q
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Can my current income influence my ability to get a Reverse Mortgage?
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A
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No. Since Reverse Mortgage borrowers need not make monthly repayments, there are no income qualifications.
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Q
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Can I refinance a Reverse Mortgage, as I would be able to do with a traditional home mortgage?
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A
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Yes. Refinancing can make sense if your home either increases in value, the interest rates drops or the maximum lending limit increases. Keep in mind that when deciding to refinance a reverse mortgage, it is important to compare the amount of benefit versus the cost of the loan before making this decision. The amount of benefit received should be twice the amount of the cost to refinance the loan.
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Q
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If I still owe money on a first or second mortgage, can I still get a Reverse Mortgage?
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A
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Yes. You may be eligible for a reverse mortgage even if you still owe money on a first or second mortgage. The funds you would receive from the reverse mortgage would be used to pay off whatever existing mortgages you have on the property.
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Q
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How can I learn more about a Reverse Mortgage and if it's right for my situation? |
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A
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Speak with a Financial Consultant at Essex Mortgage Lenders who can show you how your home can be used as a resource to meet your financial needs.
Essex Mortgage Lenders is there for you from consultation through closing. All applications must obtain HUD certified free counseling. |
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Q
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What is the difference between a fixed-rate loan and an adjustable-rate loan? |
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A
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With a fixed-rate mortgage, the interest rate stays the same during the life of the loan. With an adjustable-rate mortgage (ARM), the interest changes periodically, typically in relation to an index. While the monthly payments that you make with a fixed-rate mortgage are relatively stable, payments on an ARM loan will likely change. There are advantages and disadvantages to each type of mortgage, and the best way to select a loan product is by talking to us. |
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Q
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How is an index and margin used in an ARM? |
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A
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An index is an economic indicator that lenders use to set the interest rate for an ARM. Generally the interest rate that you pay is a combination of the index rate and a pre-specified margin. Three commonly used indices are the One-Year Treasury Bill, the Cost of Funds of the 11th District Federal Home Loan Bank (COFI), and the London InterBank Offering Rate (LIBOR). |
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Q
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What does my mortgage payment include? |
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For most homeowners, the monthly mortgage payments include three separate parts: Principal: Repayment on the amount borrowedInterest: Payment to the lender for the amount borrowedTaxes & Insurance: Monthly payments are normally made into a special escrow account for items like hazard insurance and property taxes. This feature is sometimes optional, in which case the fees will be paid by you directly to the County Tax Assessor and property insurance company. |
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Q
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How much cash will I need to purchase a home? |
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A
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The amount of cash that is necessary depends on a number of items. Generally speaking, though, you will need to supply:Earnest Money: The deposit that is supplied when you make an offer on the houseDown Payment: A percentage of the cost of the home that is due at settlementClosing Costs: Costs associated with processing paperwork to purchase or refinance a house |
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