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If you were to ask the average consumer to define the reverse mortgage concept, you would find very few able to do so. Many consumers, especially those who aren’t up on their mortgage products and their availability will never have heard of a reverse mortgage, much less able to explain the concept. But it may just be one of the best financial planning tools available to many seniors and those reaching retirement age.

As many individuals reach retirement age, their fixed incomes simply aren’t adequate. They aren’t receiving enough through social security or a pension fund to take care of the rising costs of living and the medical attention many older citizens must have. So what is the solution? Many of these retirement age citizens have children. Why can’t their children supplement their incomes, or simply take care of their elder care needs? The simple fact is that many of their children aren’t in a position to care for their elderly parents. Their incomes aren’t enough to have money left over, and if both spouses work, there is no one to take care of an aging parent.

It is at this juncture that many people have begun to turn to the reverse mortgage in seeking the increase in monthly income that is so desperately needed. The reverse mortgage offers older citizens a way to benefit from the equity in their home, because the reverse mortgage turns that equity into a monthly income. Quite frankly, unless you live with your parents, or you intend to move into your parents home when your parents pass, you aren’t going to retain the home; statistics attest to the fact that the vast majority of children sell their parents home, once their parents are no longer in need. Why not cash in on that equity when your parents are alive, and need the monthly income?

The popularity of the reverse mortgage has been steadily increasing, and many reverse mortgage companies expect 2005 to be a banner year. As the idea begins to catch, and spread among the elderly, there are more mortgage companies that offer a reverse mortgage product. The key here is that most of these elderly did plan for retirement; they did try to make the necessary adjustments so that there monthly incomes would be enough to see them through their retirement years. Thanks, however, to the rising cost of medical care, prescription medicine, and heating fuel, many older citizens have found that their planned retirement income each month is simply not enough.

There are those reaching the retirement years, for which the reverse mortgage is not an option, simply because they have no equity in their homes, or they don’t own a home; but for the remaining seniors, it’s an option that I would exercise, especially if I were certain my home would be sold during an estate or inheritance sale. The money that the reverse mortgage generates, can add so much to the few years we have during our retirement in the areas of travel, entertainment, and sheer enjoyment of life.

Since we can never be sure that we’ve properly prepared for retirement, or that some unexpected emergency won’t knock us off our feet, or that we simply do not have enough thanks to the stock market losses of recent years, the reverse mortgage is one of the best ways for older citizens to access the equity in their homes and turn it into ready cash.

We have saved the best part, however for last: any proceeds from the reverse mortgage are tax-exempt proceeds. In other words, you will not have to pay tax on the money. There are other, tax-exempt options, but the reverse mortgage remains one of the most conducive to the senior citizens needs, as well as those of their families. The interest payments on a reverse mortgage are deferred until death, therefore, seniors do not have to be concerned with making interest payments or tax payments on the proceeds.

If you’re not familiar with the reverse mortgage, and you think you might benefit, or that your parents might benefit, take a moment to seek the advice of a financial officer, and then quite possibly your attorney. Never make any decision before you fully understand what the consequences of your decision might be, legal or otherwise.

There is an untapped reserve of cash in our homes; it’s the equity we’ve built into our homes over the life of the mortgage, or simply in owning our own home. If you’re looking for a great financial tool, learning to use the equity in your home to its fullest extent is something we Americans aren’t very good at accomplishing. Fear of a loss is the number one reason we don’t utilize our equity asset. But, if you will take the time to nvestigate many of the investment options available to us, the risk is minimal, and the return is great.

Especially now during this period of extremely low interest rates, your home’s cash equity could be earning you a return of 18-20% in certain investment funds. Even if you borrow money in order to cash out the equity, you’re making money. The interest you pay is substantially less than the interest you’re earning.
Why are we so reluctant to take out a second line of credit, or increase our mortgage balance through refinancing? Many of today’s homeowners reaching retirement age do not fully understand all their investment options, nor do they understand how investments like growth funds work. They are very reluctant to try anything that is beyond the sure bet of a certificate of deposit. In so doing, they are missing a tremendous opportunity to earn a greater return on their money, and let their money work for them.

Take a look at your 401k, where are your investments? Are they earning 5-8-10%? Unless you’re ready to retire, your 401k should earn at least 6-8% on your investment. Your home is earning you nothing on your investment, at least, not in the sense that the money must stay in the home in order for the home to increase in value. Quite honestly, your home will appreciate in value if you do nothing but maintenance work and live in it. Your equity you have in your home, can earn you up to a 15% return, while you still are fairly safe with your principal investment.

Speaking of 401k investments, are you investing the maximum each year in your 401k? If you’re self-employed, are you making use of the SEP retirement options that reduce your tax liability? If you’re not, you should really consider the equity in your home as an investment option for adding to your 401k, or establishing an SEP that will allow you to invest your money in profitable and fairly safe global and growth funds. There are still many excellent opportunities in the stock market. There are segments of the market that are experiencing phenomenal and stable growth. The overseas markets, the domestic real estate markets, and the energy markets are growing, and are expected to see sustained growth. Put your money to work for you, especially if you are several years away from retirement.

Another retirement option that involves a mortgage loan is the reverse mortgage. This however, is not a way to build retirement savings; it is a way to simply access the equity you’ve built in your home, so that your monthly income levels are adequate to sustain your most vital needs. Food, clothing, heat, and medicines are a must as you reach or near retirement age. Many times, the elderly are not as prepared financially as they anticipated that they would be. How can they supplement their monthly incomes? The reverse mortgage is the answer to many older citizens’ financial needs. The reverse mortgage allows a person to withdraw a monthly sum against the equity they’ve built into their home. The interest payments are deferred until death, and the homeowner doesn’t have to worry about making a monthly payment, or borrowing money. They are able to use the money they’ve already put into their home, just when they need it most.

If you are past the age of 40, and you haven’t taken the time to consult with a financial analyst, I would recommend that you seek out one that you can trust and that you are comfortable in discussing your financial affairs with, and begin to look at your retirement options, your retirement needs, and your ability to meet those needs, based on your current income and savings. What you may find is that you aren’t near as prepared for retirement as you thought. The monthly income needed will probably greatly exceed your anticipations. But, if you own your home, you may have just prepared more than you think!

You’re ready to buy your first home, but where do you start the search? Well it would seem today the best place to start would be in the online market; the online market offers some of the most competitive interest rates are valuable and you can apply right from the convenience and privacy of your home.

Does this mean that the online process is just 1,2,3.. and you’re ready to buy? No, this means the online community is one of the better places to start. This article will take a look at the good, the bad, and the useless. Not every web site is your key to your new home; not every web site is what it claims to be. Why don’t we start with the tools that are available for the novice buyer and then move into the online programs that are valuable, and finish up with the online mortgage companies?

Many of the advertised web sites do offer really useful tools for a novice buyer in order to prepare them and determine eligibility levels. Tools such as the mortgage calculator, the debt to income ratio calculator, and tools available that will determine the mortgage products that are obtainable based on your input of information are really helpful and do actually provide the potential homebuyer with working information. Normally, all of the major web sites will provide access to these tools through the use of hyperlinks; some even offer to calculate home value based on your location.

The most useful and perhaps the most often offered a tool for the perspective homeowner is the application form to pre-qualify and to have a representative contact you. There’s nothing like talking to another person, especially one that is a specialist in the mortgage industry, in order for you to determine what you actually will qualify for and what you might actually want to buy.

What other options and tools are available on these web sites? Another useful and often overlooked tool is the link that will provide you with access to your credit file. More often than not, a young person tries to pre-qualify for a mortgage product and there is no existing credit history, there is no established credit score, therefore there is no hope of obtaining a mortgage. At least not without a cosigner. But if you’re a beginner, and you take the time to visit web sites you can gain access to information before it’s necessary to have established plan. This in itself puts you one step ahead.

What would fall under the classification of “bad”? Here’s the only item that I can truly file as a bad side effect of and online mortgage quest: your name and information is shared with all other online lenders and at some point in time your phone will ring and a telemarketer will asked to speak with you, in order to sell you a mortgage. Now, a mortgage is not really something that you impulse buy, therefore I believe this to be a waste of time for you, the telemarketer, and the online mortgage company.

What falls under the “useless” category: the web sites that offer to find bidders to bid and compete, for your mortgage business. First of all they don’t gather enough information to actually compete for anything; not what mortgage company is willing to submit a bid for your business until they check your credit file, are familiar with your credit score, and know something about the property you’re proposing to buy.

Now why would you even advertise like this? Well the answers really simple these web sites that offer to recruit mortgage companies that will be it for your business are telemarketers in disguise. That quite obviously earn a commission for every lead they provide for a mortgage company, and you are simply providing information to be one of their leads. It’s really a simple way to search for and locate live leads, and it really does save a lot of live telephone time. So there you are a general overview of the online mortgage market, the good, the bad, and the useless.