When you buy a condo, you are buying equal shares of the unit and the mortgage. As such, reversing a mortgage on a condo is trickier than with a co-operative as there is usually no property to secure. This does not mean that it is impossible, though. Here are some tips from San Diego Reverse Mortgage to help you.
The first thing you need to do is understand the difference between a conventional mortgage and a mortgage loan for equity in your home. Typically you can take out a credit line at the bank that can be used for a mortgage if you have equity in the home. The equity will secure your mortgage. If you can’t qualify for the line of credit or want more equity, you can opt to take out a second mortgage or pledge the equity as security for a loan.
Your goal here is to pay off both loans. By making extra payments towards the mortgage on a regular basis you are ensuring that you are building equity in your home and removing the risk of a foreclosure. Depending on the terms of the original loan you may even be able to reset the interest rate and reduce the principal balance.
You should also look into taking out a Home Equity Line of Credit (HELOC). This is a revolving credit that uses your equity in your home as collateral. The interest rates are usually lower. This can help to finance larger purchases or even make large home repairs. Just be careful to watch out for how often you are paying on this loan and whether or not it is within your income budget.
One method that has worked well for people reversing a mortgage is called Mortgage Leads. These are pools of money that are paid directly into an account each month. The person who receives these funds benefits because they are leveraging their equity. This allows them to take out loans that are at a lower rate than the rates being offered to people with only a primary mortgage.
Another way to take advantage of reverse mortgages is to refinance the home. The current loan could be negotiated with the current lender for a lower interest rate. In addition, refinancing the mortgage will remove the need for payments on the existing mortgage. Therefore, it can free up some cash for other needs. However, before you attempt to refinance a mortgage, make sure you understand all of the specifics of the process.
The key point is to know your goal. Are you just looking for a few hundred dollars in extra funds so you can put some extra money toward paying off the old mortgage or do you want to flip the house? A reverse mortgage can be a great way to take control of your finances by paying down debt, taking a vacation or paying for college. However, the decision is completely up to you.
It is important to remember that with a reverse mortgage you have to pay the amount owed on the loan plus the accrued interest. There is no room for balloon payments. If you think you can afford the lower payments but are worried about increasing your monthly debt, make a payment plan and work out a repayment plan with the lender. Then look into options to reduce the interest. You may be surprised how much you can actually save.
The only time when a reverse mortgage can be used for something other than paying off an existing loan is if there is equity in your home. Equity in your home refers to the difference between the appraised value and the amount you owe. Usually this amount is paid off but it is not uncommon for lenders to add on property taxes, homeowner association fees or any other necessary fees. If you own a home and do not have equity in it, you may want to consider a loan that does not require home equity. There are many private lenders that will allow you to borrow money without needing to use your home as collateral. These loans are often less expensive than a reverse mortgage and can help you move into a lower-cost housing.
If you are facing difficulties with paying your mortgage, don’t hesitate to contact a lender. Many lenders can assist with your situation and work with you to get you current with your payments with little to no effect on your credit score. They may even be able to reverse mortgage your home and help you purchase another one at a discounted price.
Reverse mortgages can be beneficial to seniors that need to remain in their homes. As the economy rises and falls, many seniors struggle to pay their monthly bills. If you have decided that you can’t afford your current mortgage anymore, a refinance may be your answer. Talk to your lender today and see what kind of options they offer. You may be surprised to learn that they won’t require any equity in your home to provide you with this service. Once you have taken full advantage of these services, you may even be able to move into your new home without having to worry about losing any equity that you have built up in it.