Gary Gresham asked:




Is an interest only home mortgage loan a good or bad idea for financing a home? These loans have become very popular and are one of the many different kinds of financing available for property.

Opinions vary as to whether an interest only home mortgage loan is a good idea for the average home owner, with valid points being made on both sides. If you are in the market for a home you need to consider all the finance options available to you, together with your ability to repay them.

Here are some interest only mortgage loan pro and cons to look at both sides of this kind of financing.

If you are employed full time, single and making a good salary then an interest only home mortgage loan may not be the best financing for you. That’s because you could pay off your loan at a lower rate of interest and in less time with a different kind of loan program.

On the other hand, you could save a lot of money by only paying the interest. It is possible that if you invested this in a safe investment you would not only have enough to pay off the principle on the mortgage, but would also gain a little capital for yourself at the same time.

This of course is a gamble, because how many people will actually invest the savings? However, if you have no other financial responsibilities, it’s one you might find attractive.

If you work in seasonal employment, like in the tourist industry, you may find that paying an interest only monthly mortgage payment allows you the freedom to pay a minimum amount when you are in “off season”.

But during the time you are working, you can make accelerated payments off the principle in addition to the interest.

The risk of paying an interest only mortgage loan repayment is that the principle is not being repaid. Unless the price of homes in your area rises, you don’t build up any equity in your home.

Paying the monthly mortgage payment on an interest only mortgage can become like paying rent. You don’t have the safety net of being able to sell your home to raise cash if you are faced with some emergency in your life.

As a young professional just starting out on your own, this might not be an issue you need to consider. But if you are married and have a family, you should seriously consider the implications of not having the kind of mortgage that allows you to build a financial safety net.

Home equity gives you a form of financial security that can come in handy if you really need to use it. This should be a consideration when deciding which home loan to choose.

A lower monthly mortgage payment will always look attractive on paper, but consider all the implications carefully before taking the option of an interest only mortgage loan as a way of financing your home.

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Terry Edwards asked:




Are you considering an FHA reverse mortgage loan on your home? While there are many advantages to these types of loans, there are also some things you must know before moving forward with this loan.

FHA stands for the Federal Housing Administration, which is a branch within the United States Department of Housing and Urban Development (HUD). In order to qualify for this mortgage program, their are certain requirements the FHA has set. One of those is that the homeowner must be at least 62 years of age, or older. The FHA also provides insurance which makes the loan program less expensive for the borrowers then similar reverse mortgage programs offered by private lenders and smaller institutions.

The only other requirement the FHA ask of you, other than being 62 years of age or older, is that you have equity in your home and little debt or mortgage against it. There is no other restrictions, required credit ratings, level of income or any other assets needed. If you are approved for an FHA reverse mortgage loan you can receive your loan in one of three options. You can take it all in one lump payment, in monthly installments for a fixed term, or indefinite term as a line of credit against the loan.

An FHA loan is paid off either when the homeowner passes away, moves out of the home, or sells the property. Then, HUD collects the proceeds from the sales. If those proceeds exceed the loan, then the difference is either awarded to the homeowner, if he is alive, or to the homeowner’s heirs. If the proceeds do not cover the amount of the loan, then HUD covers the difference.

The main benefit of these loans are that the homeowner is not required to make monthly payments against the loan. That is why they call it a reverse mortgage — because instead of you having to make payments each month, the leading institution is making payments to you — whether monthly, in one lump sum, or when you use it as a line of credit.

The way the amount of the loan is calculated has to do with the value of your home, the interest rates, the location of your home, as well as your age. These are some of major aspects of an FHA reverse mortgage to keep in mind.

Bradley

Gabriel J. Adams asked:




The HPLR mortgage program, available through your credit union, is just one more of the many ways your credit union is serving its members. HPLR stands for Home Loan Payment Relief, and is referred to as the “Helper” Loan program. Once you understand what it actually offers, you’ll see why the name is appropriate. The HPLR program is specifically for those first-time home buyers who are buying a residence they will live in themselves. HLPR loans can be used on single family homes, duplexes, condos, or even co-op properties. These loans are available to families whose median income is less than the median income in the geographic area in which they are buying a home. And sometimes, that limit is extended to a higher level in areas where it’s known to be much more expensive to live.

All the details of this program are available by accessing the link at http://www.cuna.org/initiatives/hlpr/hlpr_borrower.html. There is an extensive amount of information on the program at that site as well as a message from Dan Mica, Credit Union National Association’s president. (CUNA is Credit Union National Association).
To quote Mr. Mica, “Owning your own home is part of the American dream, and for too many low and moderate income families, it’s becoming increasingly hard to reach. The gap between the incomes of average families and the affordability of a first home is a problem. Credit unions believe the HLPR mortgage is an innovative solution that will narrow the gap.”

As usual, credits unions are living up to their stated purposes in offering these loans. They are aware that many first time home buyers would be priced out of the market today with out a program like HLPR. Using this program, first time home buyers can expect to realize savings of $1000-$2000 a year on their mortgage payments. Larger loans may be offered under a HLPR program than with conventional financing, too. That is, lenders may be willing to lend a larger percentage of the home’s value under the HLPR program.

HLPR loans are three-year adjustable rate mortgages. Generally, first time home buyers are people who will find their incomes also going up slowly over time. Further, the initial down payment buyers must make on a HLPR mortgage is only 3%—a far more manageable sum than the 10-20% required to obtain more traditional financing. Even better, the loan can go up only one percentage point a year, and is capped at only a 5% increase for the life of the loan.

First time home buyers are, by definition, new at understanding how home financing works. There are any number of mortgage programs in the marketplace which are far less advantageous to the novice home owner than the HLPR program. Some of these loans may increase far more quickly, or have far less favorable interest rate caps over the life of the loan. Sometimes mortgage lenders tempt first-time home buyers with interest only loans. Imagine the surprise and shock of some of these buyers when they realize they have not been paying down on the principle of the loan, and have been paying literally ONLY the interest owed on the money borrowed. Sure, the payments are lower, but you are not actually gaining any equity position over and above home appreciation.

This may seem like one of those “too good to be true” financial fairy-tales you may hear about from time to time. But it actually is as good as it sounds, and it is true. Credit Unions are committed to help this segment of their membership become home owners. It’s actually that simple. Think about it this way: if you, the consumer, find yourself with an excellent mortgage loan in a home you love, where will you go when it’s time to finance an automobile purchase or a new roof on that home? It’s likely you will come back to your Credit Union. And that’s the best place for you to be.

Delores