| Mortgage Refinancing
Consider refinancing your mortgage if you can get a rate that is at least one
percentage point lower than your existing mortgage rate and if you plan to keep
the new mortgage for several years. When comparing mortgages, don't forget to
include the extra fees you must pay for the new mortgage. You may be able to
get some fees waived if you are able to refinance with your current mortgage
holder.
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Reverse Mortgages
A reverse mortgage, or a home equity conversion mortgage (HECM) is a special type of home loan for homeowners over the age of 62 that lets you convert the equity in your home into cash. As the homeowner, you do not have to pay back the loan and interest for as long as you live in your home. The loan and interest is repaid only when the you die, sell your
home or permanently move out of your house. These mortgages can help homeowners who are house-rich, but cash-poor, stay in their homes and meet your financial needs.
Seniors should beware that there can be aggressive lending practices, advertisements that refer to the loans as ”free money” or fail to disclose the fees or terms of the loan. To protect yourself, remember:
- Do not respond to unsolicited advertisements.
- Be suspicious of anyone claiming that you can own a home with no down payment.
- Do not sign anything you do not fully understand.
- See out your own reverse mortgage counselor.
There are three types of reverse mortgages: federally-insured reverse mortgages,
proprietary reverse mortgages and single-purpose reverse mortgages. As with any
mortgage it is important to be a savvy consumer and shop for the best deal.
For more information on reverse mortgages, check the directory for the following resources:
- The Federal Trade Commission
- The Department of Housing and Urban Development
- AARP
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