Tag Archives: Mortgage

A Quick Explanation of a Reverse Mortgage

You may have heard about this type of loan from friends or commercials on the radio and television, but you may also be confused about what it is and how it may apply to your financial situation. The following is a quick explanation of what a reverse mortgage is.

Why is it called a reverse mortgage?
With a regular mortgage, you borrow money to buy a house, and monthly payments are made until the house is paid off. With a reverse mortgage, a lender gives the homeowner a monthly payment. Although at first it sounds as if the homeowner is getting money for nothing, it is the lender that is buying the house from the homeowner. Each month the lender’s stake in ownership of the house goes up. The homeowner is still living in the house and has exclusive use of the house while he or she is still living.

Who can qualify for this type of loan?
Anyone can qualify for this type of lending program as long as they are 62 years of age or older, and they have equity in their home. It is not necessary to use all of the equity in your home to get a reverse mortgage. Some people only use enough to receive a certain amount of money each month to supplement their retirement income.

How does it work?
You can apply for a loan with any lender that offers a reverse mortgage. The equity in your home will have to be verified. After the loan is finalized, you will begin to receive monthly payments. These payments will last until the day you die or the house is sold.

How does a lender benefit?
The lender will receive all of its money back when the house is sold plus interest. In addition, because these loans are backed up by the federal government, they are not as risky as many other types of loans.

How does a homeowner benefit?
The homeowner benefits by taking advantage of the equity in his or her home without having to move. This is why it is ideal for those who want additional income. They do not have to sell their home in order to get access to their equity, nor do they have to bother getting an equity loan that they will have to pay back in monthly installments.

Depending upon your personal finances, this type of loan may be of help for you in your retirement years. You can get additional Reverse Mortgage Information from a local lender or an online lender that offers this financial product.

The Importance Of Home Inspections

Before purchasing a home, it is most important to have a thorough home inspection done, so you don’t regret skipping it later, if problems become apparent. Be sure to have a good home inspection done.

A home inspection is a professional and objective evaluation of the current condition of a house. Home inspections are most often performed at the request of the buyer as part of the home buying process. Occasionally, the buyer’s bank protects itself from risky investments by requiring it, but it also protects the purchaser from unforeseen problems. In the event problems are found, a seller may be asked to effect repairs, to pay for the repairs or to renegotiate the sale price.

Sometimes a home seller requests the service prior to putting it on the market, so that problems with a house may be addressed.

The cost of common home repairs should be well understood by a competent home inspector. A professional home inspection is most valuable because it is unbiased and knowledgeable. According to industry accepted standards, a quality home inspection is non-invasive when performed. An inspector will not remove wall surfaces or drill holes.

A typical home inspection will inspect the following areas:

It is possible for the roof to be problematic. The general shingle condition, flashings, gutters and downspouts, should all be inspected, not to mention the readily accessible, viewable, general structure of the roof.

Defects in siding, flashings, brick, or other wall coverings should be viewed on the exterior of the home; doors and windows for fit; proper rails and general conditions, including rot, on porches and steps; if there is poor surface drainage, it could impact the house’s structure. You also need them to look for signs of shifting – cracks, out of square door frames; evidence of penetrating water.

A minor part of the overall cost of a real estate transaction, a professional quality home inspection is well worth what it costs, considering its value adds reliability and certainty. The cost of not knowing can be considerable – you just never know.

A home inspector looks at many things. The inspection report will identify problems with the home. Often accompanied by photographs, it will describe the findings in clear and easy to understand language. The home inspector may point out the various findings in person while visiting the home with the client.

The cost of a professional quality home inspection is usually in a range between $250-$500, and varies according to the size and the age of the house. If a special deal at a lower cost is offered, the prospective client must determine if the inspection follows all industry accepted standards.

If you are a seller, an inspection can help you market your house more effectively. Minor repairs will pay off in getting a better price if you do them. Unnoticed and potentially costly repairs which will be needed for the house will be brought to a buyer’s attention by the inspection. Some might break the deal. Having the inspector’s evaluation can help you get the very best deal if you do decide to buy the house.

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Renters Insurance And Your Rental Suite

Nowadays, people frequently rent part of their home to help pay their mortgage. In fact, many people are buying homes that have independent suites in them or they are building suites into their homes so that they can have a renter to help pay the mortgage.

The most common problem with suites is that of the legality of having a suite built into a single-family dwelling. Check out the local bylaws before you build a suite into your current home, to make sure you’re allowed to have a legal suite in your home. Just because a home has a suite built into it doesn’t mean that it’s been legally done; always make sure that the house is zoned so that a suite is legal.

Proper additional insurance is required for a home with a suite in it; make sure you talk to your insurance provider to make sure that you are properly covered. You will probably have to inform your mortgage lender that you have a rental suite in your home, too.

Renter’s Insurance

Many renters wrongly assume that you, as the landlord, are responsible for their belongings in the event of a catastrophic event. Conversely, only the property itself is covered, not their personal items, furniture, electronics, or clothes.

Renter’s insurance protects tenants’ belongings from these type of events, including theft. This type of insurance can protect them from all these things, in addition it can cover them for any liability if someone gets injured in their suite.

Renters insurance should be insisted upon by you. Sometimes this is a condition of the landlord’s rental agreement. There are two reasons why you should require your tenants to have this insurance. If, while repairs are being made to their home, your tenants need to step out, the insurance company will pay for hotel accommodations. Also, the medical bills will be covered by the insurance if one of your tenants gets seriously injured while inside his home/condo/apartment.

Start looking for a renter after your suite is in place and you have adequate insurance. You can advertise for renters if you don’t know anyone who is looking for a suite to rent. However, be sure to perform background checks; you want to make sure that a renter is going to fit in with your lifestyle if they’re living in your basement.

Find out the legalities of being a landlord, last but not least. You should know your legal rights and responsibilities, even if your tenant is a family member; when problems happen between a tenant and a landlord, it is often because of a misunderstanding about the legal rules by which both parties have to abide. Other than that, renting a room or a suite in your home can assist you in making your mortgage payments and possibly even help a family member who requires an affordable rental.

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Buying Versus Renting

Should you buy your home, or rent it? Two-thirds of Canadians own their own homes, official data shows, so it’s clear that for the most part, Canadians prefer to purchase their homes. Often viewed as a safe strategy, it is generally also seen as an effective vehicle for retirement savings. The ratio between rents and homes prices is one good gauge of housing affordability.

The mortgage rate that a homebuyer gets in order to finance the home is often the biggest factor, after the overall price.

When deciding if it’s more advantageous to rent or buy, one can look at the price-to-rent ratio (or P/R ratio). Using this number, you can get a rough idea if houses in your locale are priced fairly. It is easy to calculate the P/R ratio. Simply find one house, condo or apartment that is for sale, and another similar one that is for rent. Next, divide the first place’s sale price by the other’s annual rent. The resulting number is the P/R ratio.

You benefit in many ways when you sign a lease on a place to live. If you occupy the home for just a short time, you don’t have the concern of waiting for somebody to buy before you can buy another home. If there are problems with the property – plumbing, fixtures, lighting – your landlord or building supervisor normally handles them. Depending on where you rent, many utilities and amenities may be covered for you in the initial rent payment, cutting out extra bills. Lawn care may be taken care of.

Naturally, home ownership offers many advantages:

You make a payment on the house and work closer to owning something, rather than paying rent and investing in a property you may eventually leave.

You are under no restrictions when you buy a home. You can paint a wall, make additions, and hang pictures without worrying about caulking up the holes later.

It may be easier for you at tax time. If you buy an historical home, you could receive tax breaks on restoration.

We have not yet made a decision on putting in a bid for where we live yet. However, when we do decide, I think we will understand the pros and cons of both avenues.

Be realistic when talking about home ownership. A home purchase won’t solve your financial challenges. You lose a lot of the flexibility and freedom you might otherwise enjoy, and you can waste just as much as if you were renting. Buy a home if you want to. But don’t let anyone persuade you that you’re throwing your money away by renting.

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