Understanding Reverse Mortgage Fears
Estimates indicate that there is a target population of some 8.8 million senior households that both qualify for and are good potential candidates for HUD's home equity conversion mortgage (HECM) program. Yet in the most recent federal fiscal year, just 43,131 HECM loans were originated; over the sixteen year history of the program, a total of 162,268 HECMs have originated, representing only a tiny share of the potential market.
There are some obvious and tangible factors that help explain this low market penetration, most notably the high origination fees and closing costs relative to amounts that can be borrowed through the program. Less obvious are the intangible psychological fears that may prevent senior homeowners from stepping into a reverse mortgage.Being aware of these factors can help potential borrowers more clearly assess their own situation and make a more calculated decision about whether or not a reverse mortgage is right for them:
1. Fear of Giving-up a Hard-Earned Goal - Most elderly homeowners have spent their working lives focused on the goal of "paying off the mortgage." Taking out a reverse mortgage is, in essence, a decision to do a complete turnabout and initiate the process of growing a new mortgage. For some seniors, this just doesn't make sense, no matter how rational the decision to trade-in home equity for better living standards in later life may appear to a detached observer.
2. Fear of Being Suckered - HECMs are administered, heavily regulated and insured by federal government agencies (in particular HUD).From the standpoint of protecting innocent borrowers from ruthless lenders, HECMs are about as "safe" a mortgage product as can be imagined. Yet there are true horror stories from the pre-HUD reverse mortgage era about seniors being forced to sell their homes or lose them to foreclosure. Unfortunately, these stories have now become urban legends and still taint the phrase "reverse mortgage".
A related issue is the ongoing problem of elderly homeowners being contacted by "home repair" companies, annuity salespersons, and other pitch-men promoting the reverse mortgage as the ideal way to pay for their valuable product or service. The tacky nature of this type of solicitation further increase doubts and fears about wheter reverse mortgages are truly legitimate.
3. Fear of Financial Complexity - There is no question that reverse mortgages are complex financial tools. Moreover, by their very nature they run counter to many of the golden financial management rules that senior homeowners have strived to abide by over their adult lives - i.e. "reduce debt", "avoid high transaction fees", "grow your home equity", etc.
Largely because of the complexity, HUD requires all HECM applicants to participate in counseling sessions to ensure they have full undertanding of the reverse mortgage process and the other alternatives that may be available. Yet, while necessary and well-intended, the counseling requirement itself may scare-off some potential applicants who feel that they just won't be capable of digesting all the new information presented.
4. Fear of Not Leaving an Inheritance - For many seniors, the desire to leave an inheritance to children or grandchildren is quite strong - even to to the point of accepting a more modest than necessary lifestyle to ensure that an estate survives them. Seniors who have this goal and whose largest asset is their homestead, clearly will perceive that a reverse mortgage runs directly counter to their strong bequest motive.
5. Fear of Sacrificing Future Flexibility - To be a sensible financial decision, a reverse mortgage should equate to a conscious decision by the homeowner to stay put for the long term - minimally 5-7 years and, ideally, for the rest of the homeowners' lives. Obviously, this committment is especially difficult for the elderly homeowner. Death, long-term illness or incapacity and similar issues weigh heavily on the minds of many seniors and make long-term housing committments especially stressful.
To a large extent, further growth in the reverse mortgage area will depend on the success of efforts to educate the target population. Some observers feel that the nextgeneration of retirees -i.e. babyboomers - will enter their retirement years with a far greater understanding of financial matters and with less aversion to indebtedness. This may prove true but the reverse mortgage concept is so fundamentally different from what people are used to that overcomming the fears of potential borrowers will remain a challenge.
Tim Paul is a financial management executive with more than 25 years experience. His websites focus on personal finance issues including HELOC Loans, college savings and, reverse mortgages.
Choosing the right auto loan online
Buying a new car or a used car need not give you headaches anymore. Getting auto loans has become easy; you can now choose from online auto loan lending networks or get an auto loan from your car dealer. And there are many auto loan options available to choose from.
The competition to provide auto loans has boiled down to better, and faster, deals for car loan borrowers. So if you apply for an auto loan today you can probably drive home in your dream machine by the evening!
Choosing the correct auto loan requires some homework on your part - you should be willing to do some research. Not that it is difficult; you can easily do it on the Internet.
First and foremost, you need to evaluate your credit status. You need to ascertain how much of a car loan you can afford. This is important before deciding on to the car to buy. Auto loans require monthly payments, so it should be an amount that fits into your monthly budget. Many auto loan sites have auto loan calculators which can give an idea as to how much your auto loan is going to cost you each month. Once you have worked this out, you can get ready to apply for your auto loan.
Again, the Internet is a great help here. There are thousands of auto loan sites where you can apply for an auto loan online. Completing those forms is usually a breeze: just fill in a few fields and click on the 'Submit' button!
Generally the online lenders offer interest rates 1-2 per cent lower than that offered by the auto dealers. That money saved can be used to bear the other costs associated with buying your car.
Online auto loan forms ask for your basic banking details, your job status, and residence proof. Online applications are processed immediately by lenders in the network near to your place of residence. Approvals usually take less than an hour, and more important, on most sites this is a free service. Better still, an approval does not put any obligations on you about taking a loan from that lender.
If you have a clean credit status and a co-signer, then consider your loan semi-approved! The good thing about auto loans is that you can get one even if you have a less than perfect credit history. Most auto loan lenders offer bad credit auto loans. However, some lenders may charge you higher interest rates and a larger down payment because of your bad credit status. Some lenders also restrict the choice of cars models if you have a bad credit status.
Once the loan is approved, you will get loan offers from the lenders and you can choose the loan that you want.
The main criteria for choosing an auto loan should be the rate of interest and the loan period. The loan period for an auto loan is usually three to five years. You can ask for a longer period on your auto loan, say, seven years. But it is always better to repay the loan within a shorter period; that will put a lower interest burden on you. You must also find out from the lender if they allow faster repayment of auto loans without penalty charges. If they do, you can opt to repay the loans faster a few months later (depending on your income) and save on the loan charges.
Auto loans are available for new and used cars. Usually, the loan charges on used car loans are higher than that for new car loans. Research the various auto loan options available and always read the fine print of the loan agreement before you decide on your auto loan.
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Krishna Lal runs the Web site Fast Credit Info that gives information on all your credit needs. Learn more about easy auto loans online at http://www.fastcreditinfo.com
Remortgage to save your hard-earned Money
You had mortgaged your home and now you need money. What will you do now? Take another loan or borrow some money from your friend and increase your credit burden. I have a better option for you, you can go for "Remortgaging".
Remortgaging means replacing your existing mortgage for a new mortgage with a different lender. You switch on from one lender to another just because the new lender offers you a better deal to raise some money or to pay a lower interest rate.
Remortgaging can be used for following purpose -
Ø Debt Consolidation - Remortgage offers you with an opportunity to consolidate your existing debts into one thus you will be accountable to only one creditor who will be the new lender.
Ø Home Improvement – You can release your home's equity by remortgaging. It makes sense to remortgage because the interest rates offered by the new lender are very low compared with many unsecured personal loans and credit card rates.
Ø Save Money – Remortgaging can help you save that extra money you were paying to the previous lender in terms of higher rate of interest.
By remortgaging you can borrow from £25,000 up to £500,000, depending on the value of your property.
Remortgaging helps you to get a bigger loan at lower interest rates that will help you clear up debts and save up on interests. Remortgaging provides an opportunity to shift from the current rigid mortgage plan to a flexible and better plan.
If you plan to remortgage, the first step is to know what is your existing mortgage repayment terms. Any early repayment charges that you may face might make it not worth remortgaging right now. So, you need to know what kind of mortgage you already have. You must be able to answer these questions:
o Are you in a special rate deal - if so for how long?
o If you are no longer paying a special rate, are you in an overhang period?
o What penalty payment, if any, will be required to move your mortgage?
After analyzing you current mortgage status, you can proceed forward with your decision to remortgage or not. If you wish to remortgage then you may be interested in a Straight Remortgage for better rate or remortgage to raise capital.
The next step is to search for Remortgage offers available in the market. To get the best deal you need to make some efforts. Shop around; approach the banks you have been dealing at present or in the past and collect the quotes offered by them. You can also look for online lenders; sometime they provide you with better deals. So take your time and shop around, these efforts will definitely pay you in future saving your hard earned money.
Last step involves applying for the loan, compare the various quotes and look for the one that suits your pocket and meet your expectations in the best possible manner.
A remortgage for a better rate can be an easy decision, but, as in any mortgage, you should make sure that you are aware of ALL the costs involved such as Set-up costs, Ongoing interest charges and any changes and redemption charges on your old mortgage and your new one.
Many lenders provide Bad Credit Remortgage loan for people who have bad debt history, arrears or CCJs.
Remortgaging is switching over from an existing lender to a new lender who offers better deal at lower interest. Remortgage becomes a viable option when the market situation is favorable and the interest rates start to decrease. You need to shop around to find the best deal that suits your pocket.
Loan borrowing is a highly voluntary act. It is such a significant decision that without proper knowledge and understanding it would not be of much help. Sandra smith is making an honest effort in such a direction so that loan borrowing is comprehensible to lay man and thereby he can make a favourable decision that substantiates his financial status.To find Mortgage,first time buyer mortgage,buy to let mortgage that best suits your needs visit http://www.easymortgageuk.co.uk
