Reverse Mortgage and FHA Loan Articles

A regular client sends requests for articles monthly. Most are on mortgages, financing, the FHA and reverse mortgages. Here are a couple of excerpts of the latest:

What Is a Reverse Mortgage?

Homeowners are familiar with how a normal mortgage works. If you own a home, you have likely paid monthly payments on a mortgage, or more than one in your lifetime. The characteristics of the normal type mortgage include:

· You pay a monthly payment.

· The lender takes out interest and some is applied to your growing equity.

· Your equity builds up over time as you continue your payments.

· Your payoff amount to fully end the mortgage goes down over time.

· If you sell, you normally would pay off the balance on the loan, leaving your equity minus selling expenses.

Now there’s a new mortgage out there called the “Reverse Mortgage.” We’re going to turn the normal mortgage on its head and you get paid instead of the lender. It’s a mortgage whose time has come with the maturing of the Baby Boomer generation, and its characteristics include:

FHA Loans – Multiple Solutions to Mortgage Needs

The Federal Housing Administration (FHA) insures mortgages made by qualified lenders to people purchasing or refinancing a home of their own. Lenders can expand home loans to many more individuals because they can rely on the FHA insurance in case of a default. Of course, there are minimum requirements, but there are also several different types of loans that make home ownership available to many. Let’s look at the types of loans, and the situations in which they apply.

FHA Fixed Rate Mortgage (Section 203b) – This mortgage provides funds for either purchase or refinance of one to four family housing units. The fixed rate feature means that the interest rate remains stable at the initial rate throughout the loan period.

· Down payments can be lower than conventional mortgages, sometimes as low as 3% of the appraised value of the home.

· Many of the closing costs related to a mortgage loan can be financed in this type of FHA loan. That even includes the initial loan insurance premium.

By limiting fees that lenders can charge for certain items and services, the FHA fixed

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