Investment property is often a sound financial decision for most people who understand all the intricacies of investment finance. The reality is that only a few people are well versed with how investment finance works; however a high number of people are investing in homes and do not necessarily know the implications the financial decision means to their future. The purchase which seems like the best asset you could have ever acquired may end up driving you into a financial rut.
Why you need the services of a financial expert
Just like a term life insurance policy safeguards the future of your loved ones should you meet your untimely demise; a financial expert helps you to secure your investment property preventing the likelihood of debts related to it. Acquiring the asset may plunge a number of people into debt compelling them to change the lifestyle they are accustomed to, put up with low or no return on investment (ROI) and entirely fail to generate returns out of the asset.
The financial implications investors overlook
A number of investors do not know a thing about purchasing assets and turning them into money making ventures. Most people think that the asset will ‘sell’ itself and generate returns. It is these people who end up with homes and other assets which they cannot seem to turn into successful money generating business ventures.
People who acquire property through mortgage may end up with unforeseen debts if they do not have a clear payment plan to service the mortgage loans. They may find that their personal home is at the risk of repossession when they fail to meet mortgage payments.
Investors may overlook the implication of an asset purchase on their tax benefits. They may unknowingly deplete all their financial options and find themselves without anything to fall back on.
The role of insurance in securing property investment
Holding a term life insurance policy could just save your property and safeguard your loved ones in the instance that you die before completing payments on the acquired asset. The policy generally pays up following your demise and avails a source of money for your family to complete pending investment payments. The funds also help your family to maintain the lifestyle that they are accustomed to.
What the financial expert does
The financial expert helps you to make sound investment choices and ensure that your finances remain intact throughout the repayment period. Your account helps you keep up with taxes and your financial planner helps you to allocate funds when purchasing the asset; only a financial expert can help you indentify the future implications the investment will have on your finances. The financial expert is always there to help you come up with a strategy to evade any financial hurdles you may encounter. The financial expert will also help you structure the asset to improve money generated from it.
11 JulLet a Financial Expert Help You to Secure Your Investment Property
06 AprThe benefits of term life insurance policies
Term insurance: simple and affordable
When it comes to comparing different types of insurance policies for covering your life term insurance policies turn out to be the most simple and inexpensive. If your insurance needs don’t require sustaining a policy for your entire life, you may find it very appealing to get a term policy especially with the price tag being times smaller than of continuous policies.
Why term policies are the cheapest option for life coverage?
Term insurance policies will cover you only for a specific period of time. They also usually have pre-set premiums and fixed amounts of benefits to receive. Term policies can last from one to 30 years, but the most popular options are 10 and 20 year term policies. The vast majority of these policies cannot be renewed and the chances for the insurance company to pay out death benefits on term coverage policy are minimal. In fact, only about 1% of all term insurance policies actually give out a death benefit to their clients. That’s why the insurance company can place a significantly lower price tag on such a product.
Why taking term insurance coverage?
Term insurance policies are aimed at covering certain types of debts in case the policyholder is disabled or dies. Some debts that term insurance coverage may pay for include:
- Consumer credits
- Mortgage loans
- College education for children
- Funeral expenses
That’s why people who get 30-year mortgage deals are looking for 30-ear term life insurance policies. The most widespread options in terms of policy duration are those of 10, 15, 20, 25 and 30 years. Short-term policies are also available but they are rarely purchased.
Types of term insurance policies
Decreasing term insurance policies, also referred to as mortgage insurance policies, have a fixed premium over the entire term, however the death benefit is constantly decreasing with the time passing, being often connected to your mortgage debt. And as you pay out your mortgage, your insurance amount is decreased respectively. Insurance experts are not very enthusiastic about this type of policies although it’s a cheap life insurance option. But keeping in mind the low percentage of death benefit payout there’s not much sense in having such a policy.
Other types of term life coverage include:
- Burial insurance: such small insurance are aimed only for covering funeral costs.
- Group term insurance coverage: suitable for enterprises as it is designed to cover more people than standard policies.
- Specified age term insurance: such policies provide coverage only until the policyholder reaches a specified age.
- Return of premium: such policies will reimburse a part or all the premiums you have paid during the term if a claim is not filed. However, the premiums with such policies are usually higher.
Although, term life coverage is a relatively inexpensive compared to other types of insurance, your policy can still cost you much in premiums if you don’t take some time and shop around for a good policy. There are numerous insurance companies providing term insurance policies, and the rates can differ significantly for the same type and amount of coverage. That’s why it really pays off shopping around and getting as much life insurance quotes as you can, in order to find the perfect term insurance policy to purchase. Be smart, and don’t get the first policy you are offered with as there may be numerous offers way better than that.
23 SepMyths, Pros and Cons of Hecm Reverse Mortgages
First and foremost; the bank does not, nor do they want to own your home. So why do so many people believe this? Prior to FHA getting involved in 1988, the lenders would take an equity position in their Borrowers homes. That practice has resulted in unfavorable feelings towards today’s reverse mortgages. The Federal Housing Administration (FHA) has set the new standards and guidelines for HECM reverse mortgage loans and their involvement has produced a safe, well thought out and balanced loan for Seniors. Look below to find some of the pros and cons of reverse mortgages.
The Upsides
There are no monthly payments associated with a reverse mortgage. You will never be required to make a monthly payment while you reside in your home.
You stay on title and any equity remaining in the property is yours. The lender does not take title to your home!
You can never owe more money than your home is worth. HECM reverse mortgages are “nonrecourse” loans. This means that no matter how long you stay in your home, you will never be obligated to the lender to pay them any more than the value of the property, even if the loan exceeds the value.
A reverse mortgage will not effect Social Security or Medicare benefits.
Qualifying is easy. You must be at least 62 years of age and have value in you home. You do not not have to prove income or have good credit. The value of your home and your age determine loan amounts. It’s that simple.
The money you receive from your reverse mortgage is tax free.
The funds you receive can now be designed for your specific needs. Depending on the amount of funds you require, you can create your loan with a fixed or variable rate. You can also design your loan to provide one upfront payment of all cash, you can receive monthly payments or keep all of the funds due you in a line of credit and withdraw the funds as you need them. You can also create a combination of all three methods.
The funds from a reverse mortgage may be used anyway you want. After paying off any existing mortgages, tax liens or heath and/or safety issues regarding your home, you can use the funds for any purpose you desire. Take a vacation, you deserve it. Make repairs or upgrades to your home. Put all the cash on 7 and spin the wheel, the funds are yours.
You built the equity in your home over years of hard work, now you can let this equity work for you. You can feel the self reward and know that you are not necessarily reliant on your children or other family members to help you. There seems to be a since of pride that goes along with method.
FHA insures these loans. Given the state of this economy, you do not want to find out that the bank funding your monthly payments has gone out of business. With FHA insuring your loan proceeds, you can be comfortable knowing that your next payment will be guaranteed by the US government.
NRMLA. Lender/members of the National Reverse Mortgage Lenders Association are an elite group of individuals who are dedicated to helping American Seniors fulfill their retirement dreams. This group is available for you.
The Downsides
Lenders generally charge their origination fees, FHA upfront mortgage insurance (MIP) and other closing costs that add up in a hurry. The flip-side to this, however, is that if you really need the funds from the equity in your home you could borrow the funds traditionally as long as you can afford the monthly payments or sell the property. If you sell the property, you are left without a home to live in and the 5-6% cost to sell your home is considerably higher than those fees assessed with a reverse mortgage. The longer you live in the property the lower the costs average out.
Most reverse mortgages require utilizing a variable rate. This can be overcome by using a fixed rate. Unfortunately, the fixed rate reverse mortgage requires that you draw all funds available to you and may not be the right loan for all applicants.
Your mortgage debt rises fairly quickly, but, there is no surprise that the loan increases rapidly since you do not make any payments while living in the property. The interest that would be due as in a traditional loan simply adds on and creates a new higher principle value.
Borrowers are of course responsible to keep the property properly maintained and they must stay current with their homeowners insurance and property tax.
All in all I believe the upside to reverse loans far outweighs the downsides. Call on a NRMLA member and do your homework. Vist us online: www.mlsreversemortgage.com
Mike Borba (President of MLS Reverse Mortgage) is a broker that has been in the mortgage and real estate field since 1980. Toll Free (888) 888-4834. Visit our website. Read more of our articles online. Reverse Mortgage FAQ’s
07 JanHecm Reverse Mortgage
Almost everyone knows what a mortgage loan is, and a good number of those people are familiar with most of the mortgage plans available. It’s a simple concept that aids millions of Americans in financing new houses by taking out a loan and paying it back in increments. However, there aren’t many people that have heard about reverse mortgage loans, this is because reverse mortgage loans aren’t for just anybody, they’re for people experiencing their golden years and who are 62 years of age or older. Yet, with any kind of mortgage, even a reverse mortgage, people need to be careful as to what service they go to. Services that offer mortgages, especially reverse mortgages, need to be reputable, they need to have been in business for a long time and have a good track record, and perhaps most importantly the lenders employed by the company must be honest, forthright, and concerned about their clients’ welfare.
HECM Reverse Mortgage (HECM) is one such reputable product, which is linked by a reputable company. HECM is the oldest and most popular reverse mortgage product, and it makes up for 90 percent of the total market, now that’s a good reputation! HECM has been available since 1989 and is insured by the federal government itself through an equally as reputable system called the Federal Housing Administration (FHS), which is part of the U.S. Department of Housing and Urban Development. Now, that is a lot of long names, and a lot of acronyms to follow, but the only thing you as a senior citizen need to remember is HECM.
With a HECM Reverse Mortgage the older you are, the more money you are eligible to receive with your reverse mortgage loan. This reverse mortgage is a mortgage where the lender pays the borrower (homeowner) instead of the other way around. Lenders pay the homeowner in One Lump Sums, monthly payments, periodic credit lines, or a combination thereof. There is no risk of losing the house in a foreclosure like there is with a regular mortgage, and the money received can be used according the recipient’s own discretion. The way a HECM loan is paid back is through the sell of the home. The home is automatically sold if the homeowner becomes deceased (unless the heir(s) wish differently) if the homeowner is absent for more than 12 months or has to move somewhere else in order to receive care with a family member or in a nursing home, or if the homeowner decides to sell. If the house sells for higher than the loan amount due then the existing homeowner or heir(s) receives the difference. In contrast, if the house sells lower than the loan amount due, then the insurance company typically pays the difference.
HECM is perfect for senior citizens who don’t want to worry about pesky monthly mortgage fees, and want to receive money instead. Also, if you’re still confused, applicants of a HECM are required by law to attend a financial counselor with no cost to the applicant; the counseling service will provide more information into HECM and the service is paid for by the Federal Government.
For more information please visit our website on Reverse Mortgage
Trinity Reverse is the leading Reverse Mortgage Company serving California since 1984.