Reverse Mortgage Calculators Can Help You Understand the Costs
If you are looking for the best home loans then you will need to consider several factors before agreeing to the loan. Getting the best deal is essential as you need to make sure you get the best mortgage for your needs and circumstances. One of these factors is how much you can afford to borrow. There are several different types of home loans available, which all have different repayment options as well as interest rates and points attached to them. Here is a brief guide to finding the best home loans for you.
You can choose to take either a fixed rate loan or an interest only mortgage. Fixed rate loans come with a fixed interest-only payment every month. This type of loan is ideal for borrowers who can afford to pay off the loan in full every month. The amount of the monthly mortgage payment is also taken into account when calculating your total monthly payment.
Interest-only mortgages mean that you will only be repaying the interest portion of your mortgage. Once the interest-only term has expired, your payments will then change to a fixed mortgage rate. With an interest-only mortgage you will not receive any money upfront. Instead you will be paying your mortgage back over the term of the loan. After the term has ended you will receive all the money you borrowed plus whatever interest was paid on the money plus a small amount of profit. Most lenders will allow you to pay off the principal of your mortgage in three years or less.
When shopping for a reverse mortgage you should consider several things. These include the repayment plan, fees, costs and any other costs that may be involved. Some lenders require you to put down a down payment of some kind and sometimes these fees and costs add up. Find out if the lender or mortgagee requires a prepayment of some sort to occur with your loan. You want to be sure that if you do this you can afford the payments that you will have to make.
Another thing to consider is that of property taxes. A lender may require that you agree to a balloon payment at the end of your mortgage. If you ignore this and do not include a large enough balloon payment you could lose your property tax exemptions. Lenders may also charge an early repayment penalty which is based upon the current tax rate. Again, you want to be sure that you can afford to make the monthly payments.
One last thing to consider is reverse mortgages are secured loans. This means that your mortgage is actually a second mortgage on your home. Therefore, if you are unable to repay your principal it will take control of your property. Borrowers cannot access their principal for several years. However, during this time they can still live in their property.