Tag Archive | "Loss mitigation"

Drawbacks of Reverse Mortgage

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Reverse mortgage is the ideal tool for retired or elderly citizens to take out an income in any form i.e., installments or lump sum by putting equity which they have raised in their homes. It is really helpful for elderly citizens who are in great need of income to meet their everyday expenses, but still it has some drawbacks. These drawbacks are listed below:

High Fees & Charges

Reverse Mortgage

Individuals taking out reverse mortgage loan putting the equity on their home, but still banks charge them a high fee to initiate their transactions. In reality, ReverseMortgage.Org stated that as a portion of a reverse mortgage, homeowners may sometimes be required to pay of an initiation fee that is $2,000 or 2% of the total amount of loan. Many homeowners add this fee into the amount of loan and pay off it with interest on loan over the term of loan.

In addition to this fee, there are several other fees that homeowners are required to pay off. These fees include appraisal fee that can be of several hundred dollars, a recording and credit report charge that is about $200, a flood certification and a pest inspection fee that is about $150. Homeowners may be responsible to buy mortgage insurance coverage and for this they have to pay off a service fee that ranges from $30 to 435 per month.

Transfer of Your Family Home to Your Children

Usually parents want to pass their family home onto their offsprings. However, with reverse mortgage even though the lenders do not take the home’s title, borrower has to pay off the mortgage within a given period of time with interest. In most of the cases, borrowers repay the loan by selling their home and after that they turn over the proceeds or a part to their bank.

Many families buy an insurance coverage on the homeowner and they use their adult child or the lender as the beneficiary. This strategy helps such families to repay the bank without having to sell their home upon the death of the homeowner. It is advisable to you to consult with an authentic and expert insurance agent to find out the best option to make sure that if such insurance policy is good enough to fulfill the outstanding debt.

Affect on Future Financing Abilities

An individual is said to be creating a big liability when they start a reverse mortgage. It is because they have to repay the loan with interest. However, many borrowers do not realize that they are more likely to hurt their future financing ability by establishing a reverse mortgage.

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What do you understand by the Term Refi?

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Refi is a term that is commonly used in the mortgage banking industry. Refi is just a short form of refinance. A refi is formed by obtaining finance through a new mortgage loan in order to pay off an existing mortgage loan. Though to proceed with a refi there are numerous ways, there are two basic types, and the reasons for which a person choose to refinancing depends on individual financial situations.


Straight Refi

The most common refinancing situation is a straight refi. The meaning of a straight refi is that a borrower is only refinancing the exact amount he or she owes on an existing mortgage. Often, this is done by people to change either the terms of their mortgage loan or their interest rate.

If a lower interest rate is carried by the  refi than due to this as compared to a homeowner’s current interest rate then it saves the homeowner money over the course of the loan, and sometimes it also lowers his or her monthly payment. Sometimes people proceed with a refi in order to extend the terms of their loan, which may also lower monthly payments, but when possible this is such a situation that should be avoided, unless the interest rate can simultaneously be reduced.

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Foreclosure is the solution available for a lender if a borrower defaults. This is a legal right for the lender against the property of borrower. normally when a lender gives a loan to a person, lender obtains some sort of security from that person usually any property. and if that borrower fails to return the loan amount. the lender try’s to get that security.

If court grant the right to the borrower that lender can not repossess the property. then lender goes to the Foreclosure right. Foreclosure is a process when the borrower fails to fulfill any terms and conditions attached to the contract. foreclosure

The failure is mostly that of repayment. then lender obtains the ownership right associated with property. Lender sells the property and collects the remaining payable loan amount and any financial charges which he bares in legal proceedings.

Kinds of Foreclosure

The Foreclosure assessment starts after a certain period from the default. The borrower has the right to protect himself and to his property. Mostly there are two kinds of Foreclosure are : one is from Court order and other with mortgage contract. but there are different more kinds also.

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