Reverse Mortgage and Traditional Mortgage Differences and Similarities

There are a lot of new choices you face when you retire. One of those choices might be what type of home loan to get. Obviously, you could choose the type of traditional mortgage on your property that you can get at any adult age. However, you could also opt for a reverse mortgage only open to those who are 62 and older. Here are some similarities and differences between the two.

Similarity: They Both Require You to Own Your Home

A mortgage is a loan against the value of a property you own. Both traditional and reverse mortgages require you, as the person signing the contract, to own the property. As a reverse mortgage holder, you are required to use the home as your primary house as well. A vacation property or rental property will not do. The only exception is if you live in one of the units yourself in a multi-unit home with a small number of units.

Difference: A Reverse Mortgage Requires You to Own Your Home for Longer

A big difference between a reverse mortgage and a traditional one is the traditional one has a schedule to which you have to adhere. Usually, you have to pay a bit toward your mortgage each month. In a few years, the total is paid off. A reverse mortgage does not make you make payments back toward the balance while you keep living in the home. However, the freedom you give up is the freedom to move because the agreement lasts for many years.

Difference: A Reverse Mortgage Lets You Borrow in More Ways Than One
A regular mortgage usually lets you take out a set amount of money all at once. A reverse agreement allows you to do that if you want to. However, the unique reverse-loan mortgage parameters allow you to also choose other options, such as setting up a credit line. That lets you take out particular amounts of cash when the need arises. You can also ask for monthly payments of a certain size to be automatically made to you, if you prefer that method.

Similarity: Both Mortgage Types Have Associated Fees

Another similarity between the two mortgage types is there are fees associated with both. In the case of a traditional mortgage, some of those fees are often more obvious and concrete. For example, closing costs are clearly outlined. Also, an interest rate and loan duration are both established when you sign the contract. That means you know exactly how much interest you will pay by the end of the loan.

Since the duration of a reverse mortgage is unpredictable, the total interest you will pay on one is equally unpredictable. The only thing you have control over is choosing the lender that offers the best interest rate. That way you can minimize the amount of interest you will eventually pay as much as possible, even though you cannot know what the total will be.

Similarity: Both Loan Types Come with Home Loss Risks

A common concern of getting a traditional mortgage on a retirement income is that you might be unable to make your mortgage payments. That could lead to eviction. A reverse mortgage does not have that particular risk, but home loss can still occur. For example, if you ever file for bankruptcy, your reverse mortgage is called in. You also have to prove you can pay taxes and care for the property. Additionally, the home can be sold for the lender to get funds back, if you ever move out and do not pay the balance you owe.

Making a Final Comparison and Mortgage Assessment

To make a final comparison and mortgage assessment, you have to do your homework, as you can see. Talking to a reverse mortgage counselor who has no stake in your decision is an ideal option. If he or she is not affiliated with your preferred lender, you will get completely unbiased advice on the subject.

 

Maintaining A Fashionable Lifestyle With Alamo Associates

We live in an age when consumerism is perhaps at its peak. Financial facilities that are now available have led to a general belief that it is now easy to buy whatever we wish, and then pay for them later in manageable bits and pieces. This has resulted in buyers becoming more aggressive. Buy now and pay later is the culture that has taken over the world. As a result, people are being more and more driven towards debt.

Easy money fuels buying

It is so easy to get into debt. Suppose you have a reputation for being fashionable, and you take pride in buying new items frequently. It is quite natural that in order to stay fashionable, you indulge in spending more on branded clothes and accessories. You feel a tinge of excitement every time you see a “sale” sign hanging outside of a store. In order to stay tuned with the trends, you become unmindful of the spending since money is now easily available through various financing schemes and credit cards. You pamper yourself with shopping sprees that soon become your habit.

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The debt trap

The habit of uncontrolled buying can keep growing. This can lead to a dreaded financial rut as debts mount on credit cards. The temptation to borrow from multiple sources to keep pace with your buying habits is always a danger. Debt can also get worse due to just paying the minimum amount off every month against the debts, which is quite common with other financial needs, but the burden of debt gradually acquires menacing proportion. Along with other bills that need paying each month, managing debt can become a big problem. Missing out on payments can make things worse for you as debts keep piling and you can also end up with late and missing payment fees.

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Borrow from a single source Like Alamo Associates

So what options are available to help manage your debt and repayments?  You need to look for support from a company like Alamo Associates who prioritise what clients need by offering a single monthly payment with low interest rates.  The idea being that it is easier to deal with a single lender who offers finance at lower interest levels, enabling you to pay off the total sum of all other outstanding debts.

What Will Happen?

A company like Alamo Associates will first evaluate your needs and financial situation, before they offer you a new loan/payment scheme that should be manageable for you.  The new loan is obtained at lower interest rates so that you pay less every month and can hopefully lead to your debt being repaid in a way that still leaves you able to live day to day.

You have thus found out a way to get out of the vicious trap of debts that has now becomes easy to manage. You don’t need to give up your love for fashion to live a life free of debt. All you need to do is manage your finances better!

Getting Financially Savvy In Time For 2020

With Brexit edging ever closer, the credit crunch still in full flow, and money becoming increasingly tight, 2020 may well be the year when many people have to, once again, tighten their belts when it comes to family finance. But, if we are being truthful, are we as canny with our budgets as we could be. I know my answer to this question is no, but 2020 could be the year when you change all this.

Woman with coins in jar

Woman with coins in jar

Here are some of the things you could be looking at.

Bank Accounts 

Look carefully at your bank accounts. I have had the same bank account with the same bank for many years, but I’m not sure it is the right one for me now. Shopping around for a new account with better interest rates on savings could help to increase savings, and if they also offer things like travel insurance and other incentives, this may also save the pennies. In addition, my son Joe is now almost 11 and I think it is time he had a bank account of his own to teach him all about the reasons for saving. Many banks offer specific savings accounts for families and these are well worth a look.

Borrowing

Look carefully when you need to borrow. Bank loans and borrowing can leave you in a position where you can only borrow a large amount, which you then end up paying interest on. Borrowing in general can also be difficult if you have a low credit score. Polar Credit could well be worth a look if either of the previous statements apply to you. They offer a credit line which allows applicants to borrow money as and when they need it. Customers apply for a credit limit through an online application and if the application is approved, sums of money can be transferred to your bank account. Interest is paid only on the amount of money drawn out of the credit line, not on the total credit limit agreed, and repayments can be tailored based on an individual’s current financial circumstances with only a minimum repayment being a required each month. This means you can borrow small amounts (from £25), get the money quicker than you would from your bank, and with far lower interest rates than you would find from payday loan lenders.

Household Bills

Look at the household bills to see where savings can be made. Utility bills need to be looked at carefully, swapping your provider can lead to quite decent savings, and you can also lock yourself into deals which fix your rates for up to 12 months. In addition, if you use Quidco, you can gain cashback when you swap.

Your Shopping

Write a shopping list. This may sound like a no-brainer, but I never do this – ever. I walk around the supermarket and throw anything (and everything) in. Planning meals properly, checking what you actually need and writing it all down in a list should avoid waste and impulse buys.

Your Home Insurance

Keep up to date with when insurances need renewing and then shop around. I kept the same home contents insurance for years, I just kept renewing at a rate of £33 per month. I then had a random letter from ‘More than’ and saw they did home contents insurance. A quick phone call led to a new policy saving more than £250. When it comes to renewing, barter, and if that fails, get more quotes.

Shopping Online

When you shop online, shop savvy. Look for voucher codes, free delivery offers, companies that offer free returns. Sign up to email alerts that will tell you when the sales are on, or if there is a flash sale coming up. Nobody says you should never shop or treat yourself, but there are definitely more savvy ways to do it.