Tag Archives: personal finance articles

Reverse Mortgages – How Can You Benefit?

Reverse Mortgage

A reverse mortgage is a type of mortgage in which you can release equity from your home in order to help fund your retirement. This can be an excellent tool for helping overcome the gap between the end of your super or pension and your actual bills. Read on for more information about reverse mortgage solutions.

What Are Reverse Mortgages?

Remember all the years that you spent paying off your mortgage? What if you could get that money back? That is, essentially, what a reverse mortgage is. These types of mortgage are only available to those over 60, and they’re meant to be used in order to support your retirement lifestyle. The Australian government is making it so that people are more responsible for funding their own retirements – and this making it difficult for some people as their super and pension aren’t providing the money they need to support their chosen lifestyle. It may not be the extras doing them in, either. It could be something vitally important such as medicines, hospital stays or a new car.

Many people will go the obvious route, selling their biggest asset for more money. Unfortunately, this can often compound the problem as they now need a place to live. The answer to getting the money that you need to fund your retirement while still living in your home is to take advantage of reverse mortgages. As stated above, it’s kind of like getting mortgage payments yourself.

A reverse mortgage is a type of mortgage available to property owners, older than 60 and they’re great for pensioners. These mortgages allow you to release money from your home using equity. These funds can be used as a stream of income or can be borrowed against. Like all money – it can be used for anything you like. You can use it to fund travels, medical needs, home improvements, anything you want.

This is still a loan product, which means there is still interest that you will be charged. However, you aren’t required to make payments on this type of loan. Your interest on this loan will be capitalised, or added to the amount of the loan. Instead, you will repay this loan either when the home is eventually sold. Hopefully, the sale of the house will more than pay off the loan and leave some profit in your hands or the hands of your beneficiaries.

You have a variety of reverse mortgage options if you’re over sixty and you own your home. It’s important that you choose the loan which is right for you, and that will depend on your own personal needs and a variety of other factors.

In order to find the correct solution for you, it’s recommended that you work with a professional mortgage broker in order to help you find the reverse mortgage solution which is best for your needs. These brokers will be able to look at your situations objectively, and they’ll know exactly what solution (or solutions) will be the best fit for your circumstances. They can then take their skill and expertise, along with their access to multiple lenders and hundreds of loans and put it to work for you. They’ll do all the legwork, finding the loan which will give you the highest amount of money with the lowest interest rates.

Do keep in mind that a reverse mortgage is still a loan, and it will have to be repaid at some point in the future. While it might not be you who will be doing the repayment, you still want to make sure that you don’t burden your survivors too much. If at all possible, it would be nice if they walked away from the sale of your home with some little bit of profit, or maybe even found a way to keep the home they may have grown up in. Keep this in mind when you’re looking into reverse mortgages, and your mortgage broker will be able to find you the best possible loan solution to help you and your family get through your retirement gracefully.

Eight Strategies for Paying Off Your Mortgage Early

mortgage

Every homeowner dreams of the day they can burn their home mortgage note because the entire balance has been paid. There are some limitations for new mortgage loans that carry early pay-off penalties, but most banks will assist the homeowner by answering questions concerning the best methods to pay the balance down more quickly. Work directly with the lender and avoid anyone who promises to make the payments on your behalf. Embrace one of more of the following strategies to work toward financial freedom by eliminating that last long-term debt.

1. Pay extra principal – Additional principal payments of $25, $50, or $100 each month paid consistently throughout the year will shave years off the entire mortgage balance. Pay the full mortgage amount each month and add an additional $50 consistently for one year. Each time the statement arrives, compare the values against the previous statement. Highlight the outstanding principal amount and keep all of the statements together. If doubt of progress arises, look back across the previous statements and note the progress. Some mortgage statements also have a projected date when the final payment will be due this date should change as the principal amount decreases.

2. Reduce other expenses – Choose one or two seemingly frivolous expenses that can be eliminated from the monthly budget until the mortgage is repaid. Those expenses can be reinstated once the goal is reached. Add the entire dollar amount from the saved expenses to the mortgage payment every month. Continue to monitor the monthly progress reported on the mortgage statements.

3. Make extra payments – Whenever the budget will allow, make an extra full payment throughout the year. Monitor the drop in the principal amount reported on the monthly mortgage statement. The entire extra payment will be applied to the principal without any money being applied to the interest due on the loan.

4. Pay one additional payment annually – Commit to making one extra mortgage payment with the calendar year. If $1000 is paid against a 30-year mortgage every year, the mortgage term will be shortened by four and a half years. All the interest that would have to be paid for that part of the loan is saved and will add up to more than $40,000.

5. Switch to bi-weekly payments – Make two half payments within the month. This is a great option for those who are paid bi-weekly. Twenty-six payments will be made in the calendar year which means that thirteen full payments are made instead of twelve. This method will reduce the mortgage term by six years on a 30-year mortgage. Progress is made, but the extra payments are spread throughout the year to make budgeting easier.

6. Treat a 30-year like a 15-year – If the current mortgage has a 30-year term, calculate the 15-year payment schedule and pay accordingly. The additional funds will be applied directly to the principal and will reduce the term of the loan by half. This method is beneficial when unexpected expenses require a reduction in the mortgage payment for one month. Since the 30-year payment is actually due, a lower payment can be made without paying any penalty. The higher payment can be made in subsequent months.

7. Apply tax refund to mortgage – Whenever a tax return is received for overpayment of income taxes, apply the entire refund to the outstanding principal amount on the mortgage. Readjust withholdings for the next year and apply the amount saved each month.

8. Sell an asset and apply the funds – Unused assets are a source of funds that can be applied to an outstanding mortgage. A boat that sits on its trailer can be sold, and the funds used to pay down the mortgage balance. Consider the goal of living a debt free lifestyle when considering which assets can be sold to contribute to the project.

Many mortgage calculators exist to aid in creating an accelerated repayment plan. If emergencies arise, simply reinstate the plan when other obligations allow. When the mortgage is paid off, set another large goal to work for or reward the entire family with a once-in-a-lifetime vacation.

Matt is a freelance writer for Money Choices, an Australian website where house buyers can compare a range of refinance home loans from various Australian banks. Click here to visit their website.

Credit card consolidation: An easy way to pay off debt

The problem with credit card arises when you are buried in unpaid credit card bills. An easy way of paying off debt is credit card consolidation. With credit card debt, it is very difficult to regain financial freedom. So it will be wise on your part to look for some debt relief option. If you have high interest rates on your credit cards and if you are unable to pay more than the minimum amount every month, then you will remain in debt for the next 20 to 30 years. Unfortunately, this is the position that the banks want you to be in because this is their chance to earn. But don’t fall prey to such situations. Read on to know how credit card consolidation programs help you get rid of debt.

5 Benefits of credit card debt consolidation programs

There are multiple benefits of credit card debt consolidation program. Here are some of them.

1.Lowers interest rates: As you are enrolled in a debt consolidation program, your debt consultant will negotiate with your creditors and attempt to lower the interest rates on your loans. With lower interest rates your monthly payments will also decrease. So, with affordable monthly payments you will easily be able to get rid of debt.

2.Single monthly payment: You will reap the benefits of a single monthly payment if you decide to pay off debts through a credit card consolidation program. Instead of writing multiple checks to multiple creditors, you just have to make a single monthly payment to the consolidation company. Save money and accumulate your savings in this debt account. The debt consultant will eventually pay off your creditors as the account grows.

3.Eliminates late fees and penalties: If you have missed out payments in the past, then you must have accrued a huge amount of late fees and penalties. In a debt consolidation program, your debt consultant will eliminate all late fees and penalties in order to make it easier for you to repay the debt amount.

4.Stops harassing creditor calls: If you are late on your credit card payments, then it is very natural that your creditors are calling you day and night to get back their payments. These creditor calls can sometimes become too stressful and annoying. If you sign up with a debt consolidation program, then your debt consultant will negotiate on your behalf. Therefore, the creditors will no longer call you. They will be in direct touch with the consolidation company.

5.Doesn’t hurt your credit score: Many debtors are worried about approaching debt relief companies being apprehensive about the bad impact it has on his credit score. But credit card debt consolidation program doesn’t hurt your credit score as you are making regular and timely payments. Actually, the debt consultant pays off your creditor every month. So do consider making your monthly payments on time.

Credit card consolidation program is the most common way of getting out of debt by professional help. Take into account the above mentioned benefits before approaching a debt consolidation program. Also check the BBB rating of the company to avoid any kind of scams.