If you own a home, you know mortgage products have moved beyond the basic 30 year fixed option. Reverse mortgages are one such product and here is an overview.

An Overview of Reverse Mortgages

A typical mortgage is created when a lender provides you with a lump sum amount of cash to purchase real estate. In consideration of this, you agree to repay the mortgage on a monthly basis for a defined time period at a particular interest rate. The length of the repayment period and interest rate, whether fixed or adjustable, set the monthly payment amount.

A reverse mortgage works in a similar way, but backwards. It is a fact that the baby boomer generation is moving into their retirement years. A high percentage own homes with significant amounts of equity in them. The problem, of course, is equity is a fixed asset, to wit, you can’t see it in your bank account. Traditionally, the best way to turn this hard asset into cash was to sell the property and move down to something cheaper. You then pocketed the difference in the form of cash.
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Home mortgages are loans that are taken to buy a property, for which the property itself is used as collateral. Owning a home is a very big, and usually a one-time investment for many. With increasing real estate prices and decreasing interest rates on loans, many people are using the home mortgage loans to buy property.

Home mortgage rates are the rates of interest that are to be paid along with the capital for taking the mortgage loan. Home mortgage rates do not remain steady over a long period of time. A lower rate means lower monthly payments, leading to lower costs on the property. Depending on the kind of interest rate, there are two kinds of home mortgage loans: Fixed Rate Mortgages (FRMs) and Adjustable Rate Mortgages (ARMs). FRMs are mortgages for which the rate of interest remains the same for the entire period of the loan. These can be for a period of 10, 15, 20 or even 30 years. Adjustable rate mortgages, on the other hand, have fluctuating rates of interest. This is ideal when there is likelihood of the rates to decrease. ARMs are preferred by people who plan for shorter periods. ARMs are offered at lower rates than FRMs to attract customers, but they also contain a certain level of risk. The fixed rate mortgages are a very predictable, safe option. (more…)

Trying to buy your own home but can’t get a mortgage because of your bad credit rating? Stop applying for regular mortgages now and start looking at the bad credit mortgage market.

Traditional mortgage providers rarely offer their mortgage products to people with bad credit. Why? Because if you’ve had trouble paying your bills, credit cards or loans in the past, you’re a bad risk. Lending you tens or hundreds of thousands of pounds could be a bad idea.

The recent increase in the number of people in this situation, however, has meant that demand has risen for suitable mortgage products. The larger lenders are still wary of bad credit risks, so it has fallen to more specialist lenders to fill the gap in the market. Consequently, the bad credit mortgage market is growing, and is competitive, which means that customers suffering from poor credit can find a range of mortgage products that suit their needs and that help them get their finances back on track. (more…)