Mortgage Refinancing can be a good idea for homeowners who:

• want to get out of a high interest rate loan to take advantage of lower rates. This is a good idea only if they intend to stay in the house long enough to make the additional fees worthwhile.
• have an adjustable-rate mortgage (ARM) and want a fixed-rate loan to have the certainty of knowing exactly what the mortgage payment will be for the life of the loan.
• want to convert to an ARM with a lower interest rate or more protective features (such as a better rate and payment caps) than the ARM they currently have.
• want to build up equity more quickly by converting to a loan with a shorter term.
• want to draw on the equity built up in their house to get cash for a major purchase or for their children’s education.

The Senior Reverse Mortgage Program Has Evolved Over the Years and is More Attractive Today
By [http://ezinearticles.com/?expert=Tim_G_Robbins]Tim G Robbins

Since the beginning of the federally insured Reverse Mortgage in 1988 when the government started regulating them, the program has gone through many changes that have not only created more security for the senior homeowner, but reduced fees and increased borrowing limits. Also not to mention increased the options that are available for the senior to choose from or change too over the years.

Unlike any other program in the mortgage industry there is no program that even comes close to the Reverse, it is designed to have the most flexibility, and the safest to all seniors who own their home and are over 62 years of age. Now in 2009 where more and more seniors are seeing the true value of a Reverse Mortgage, and that it is not just for the seniors who are poor, it is just about for everyone who is concerned with having security in these troubled economic times! Yes security simply because the statistics show the 78% of all seniors who elect to take out a Reverse Mortgage utilize the Equity Credit Line which is built into the adjustable rate program.

Now in addition; there is a program for the person who has fear of adjustable rate mortgage which is understandable they can elect to have a fixed interest rate that stays the same forever, but they must receive all of the money at the time of closing. There are no other options at this time. So I guess you are wondering why that is, well it is because of the investor market for selling mortgage backed securities. When investors are looking to invest they look for the greatest return over time, and buy investing in a fixed interest on the return and a fixed amount of the total debt there is not inflationary rate of return. As with the adjustable the rate of return can be much greater over the life of the loan, which can be upwards of 20 to 30 years depending on how long the senior lives. This is important simply because the Reverse Mortgage is a long term investment, and there are no payments over the years until the senior ceases to live in the home as their primary residence or the past away.

Over the years that the Reverse Mortgage has been in existence, the Fannie Mae has been the purchaser of mortgage backed securities of the Reverse Mortgage, but now they are mandated by the treasury to reduce the balance sheets over the next two years, so the industry bankers will be looking for new ways to attracted investors. In doing so they must be able to package up these securities and make them attractive to the investors. This will only be accomplished by increasing the margins that are charged on each loan, the higher the margin I.e. fixed profits.

For instance; today the margins that are added to the index to come up with the effective interest rate are something like this Margin 225 tied to the Libor, 250 tied to the CMT or ( Constant Maturity Treasury) or 275 CMT, just to name a few. Not to mention the fixed rate, this is regulated by the bond market just like conventional mortgages!

In the near future will see the margins start to increase to maybe 3-4-5% to make them more attractive to the independent investor who is looking for security and rate of return. See unlike traditional mortgage securities the Reverse Mortgage is a protected investment, and the reason being the lose factor is almost non-existent. The money that is loaned out the senior is insured that it will be returned to the bank over a period of years, because the one thing that is certain is that the senior is going to die at some point in the future. This is determined by the actuarial tables that also determines how much monies will be available at what age of the senior.

A person at age 62 will receive for less then a senior who is 80 years old, because the life expectancy is less for the 80 year old person then that of the 62 year old person. Remember the senior stays in the home and makes no mortgage payments of any kind until the cease to live in the home as their primary residence, by death or the sale of the home.

Flexibility

Within the Reverse Mortgage the senior is in total control as the how they receive the money from the mortgage and how the spend the money. The options are only restricted by the plan that they choose to use!

· They can take all of the money

· They can take a portion of it and leave a portion of it in the credit line

· They can take a monthly amount for a term period

· They can what is called a Tenure for life

· They can take Tenure for a portion and have credit line.

· They can change the program from time to time.

· Then can withdraw lump sums at anytime.

As you can see the possibilities are endless these are just a few ways that a senior can utilize the mortgage. Also if at anytime they decide or have the means to payoff the loan they can do so without any prepayment penalties.

TODAY’S ECONOMY

In these uncertain times unlike anytime in history it is more important to have a security instrument in place for the unexpected twist and turns that our lives may take in the future simply because of he unprecedented world of the economy. If a person does not need the funds currently they will have the option of having a credit line that is sitting in the wings, growing over time by .50% more then the interest rate of the loan balance, available to them if and when they ever need it.

The one thing that we all can expect is change and that change can be dramatic and it can be devastating so if you are concerned and you are a senior homeowner over the age of 62 stop listening to uninformed people who give wrong advice and speak to a professional who understands and is knowledgeable about the   rel=nofollow Reverse Mortgage and secure your future today before the margins increase to 3-4 or 5% plus the indexes and if inflation starts to come back and it will you will not be able to maximize your portfolio act now.

Tim Robbins, Sr is a senior Reverse Mortgage Specialist with Equitable Reverse Mortgage. The main goal is to provide the best education resources available and to all place the seniors first and foremost.

My website is designed to give you all available information which you can review either in print or video by visiting http://bestmortgageplans.com for all you senior resources you may need for a good life.

Also contact me Toll free at 800-610-3599 for a Free Report on Reverse Mortgages

Article Source: http://EzineArticles.com/?expert=Tim_G_Robbins http://EzineArticles.com/?The-Senior-Reverse-Mortgage-Program-Has-Evolved-Over-the-Years-and-is-More-Attractive-Today&id=2150854

The answer is that it all depends on your situation.  I know everyone has heard the saying that you should refinance when rates are 1% lower.  That isn’t always true, sometimes it is more and sometimes it is less.  The way to figure it out is by dividing the costs of the loan by the amount of monthly savings to see how long it will take to recover your money.  If you plan on staying in the home and/or keeping the loan for at least that long then it makes sense. 

If you have an ARM (adjustable rate mortgage) then you need to decide how long you are going to stay in the home and/or keep the loan.  If you are unsure then you may want to think heavily about refinancing since rates are at historic lows.  There is no sense on risking it.  Look how many people are in trouble right now because they took out an ARM.  The article below has some good advice for you too.

http://money.cnn.com/2009/10/20/real_estate/refinance_adjustable_mortgage.moneymag/index.htm?section=money_realestate

Is your ARM (Adjustable Rate Mortgage) about to adjust? My friend’s just did and her payment dropped $745/month.

An adjustable loan may not be such a bad thing after all! As a mortgage advisor, I get calls from people all the time who are terrified that their current home mortgage is about to adjust, and when I say, “That may not be such a bad thing” I often hear silence… Followed by, “What do you mean?” Or, I don’t want to take that chance. Fear of the unknown combined with the media storm of bad news about evil adjustable loans, etc and I can certainly understand why.

Now, this isn’t for everyone, but I say have your Mortgage Advisor look at the terms of your existing Note, and depending on when your loan is scheduled to adjust, and the parameters around how it adjusts, and what index it’s tied to… Letting your loan adjust just may be the best option for the short term.

Here is a great example: A friend of mine came to me earlier in the year asking about refinancing, and based on the current value of their home, the loan to value was too high. Long story short… Their submission for a Loan Modification was denied, so I suggested calling their current lender to see if they are participating in the ” Making Home Affordable” program, also know as HARP, and they were told they didn’t qualify for various reasons (each time they called they were given a different story). They have toiled over getting out of this adjustable loan…

Last week she came to my office and said, “You’ll never believe what I got in the mail…”  I thought they had been approved for the HARP program, but no – they were notified that their loan was adjusting from 6.250% DOWN to 4.250%!

How is this possible you ask; her loan is tied to the LIBOR and this particular index was at 5.271 five years ago when they purchased. Today that index is at 1.2693. Combine that index with the other terms of their loan and voila… Rate is dropping 2.00% and their payment is dropping $745.34/month. Their loan will not adjust for another 12 months, which will allow them some time to save the $745/month (just shy of $9,000 in one year), and who knows where values will be in October 2010…

So, pull out that mortgage note and read it! If you don’t understand it have a reputable Mortgage Advisor read it for you. Lot’s of folks think they have no options at all and it could be that doing nothing is exactly what you should do!  – Jana M Lane

As mentioned yesterday, I am going to discuss the possibility of refinancing my primary residence. Before I go into the details I first want to discuss the reason to refinance as well as some things to consider before you refinance.

Reason(s) to Refinance-To lower your interest rate is really the only reason to refinance. Lowering your interest rate will obviously cause your payment to decreasing, thus increase cash flow if desired. However, lowering the payment period (IE from a 30 year to a 20 year mortgage) without lowering the interest rate is unnecessary. Instead just pay off the longer term mortgage like the lower term mortgage and you will pay it off in the same time you would without the closing costs.

Things to consider before refinancing:

1. What is my breakeven point? This question could be rephrased as, how many months will it take to recover my closing costs? Since all closing cost are either paid up front at the time of the refinance or rolled into the new mortgage, you will want to know how many months will it be before the lower payments make up for the closing costs. To determine your breakeven point, take your closing costs and divide them by the difference between your old payment and new payment. That number is the number of months it will take you to break even on your refinance.

2. How long are you planning to stay in the house? If you are planning on moving in the next 12-24 months and your breakeven point is 36 months, then it would be unwise to refinance.

3. Am I getting the best rate on the market? Do not simply refinance with your current lender just because you get something in the mail from them offering you a lower rate then what you already had. Check websites like Bankrate and Lending Tree and see if you can get a better rate elsewhere.

4. What kind of loan am I getting? I do not recommend anybody get anything except a fixed rate loan. Especially in the 4.5%-4.75% world we currently live in. Adjustable Rate Mortgage (ARM’s), Interest only, and Balloon Mortgages might offer a lower interest rate initially but are more risky over the long term and can adjust upward. Why not lock in a low interest rate now with mortgage rates at the lowest they have been in 40 years? Another thing to look at it how many points am I paying? Points are simply prepaid interest that is paid at closing. 1 point means that you will pay 1% of the loan value upfront at closing. Points will then lower your rate, but unless the difference in rates is significant (.375-.5%) it might be better for you to pay no points and not prepay the interest.

5. What is my home’s current value? This is important to know before you start the process because due to the housing bubble popping, many homes are now underwater. This makes it virtually impossible to refinance your mortgage unless you can bring a large sum of $$$ to the table at closing to bring the loan amount to what the house is worth.

With rates being as low as they have been in years, now is a great time to refinance. Has anybody got any other suggestions or recommendations to consider before refinancing?

Early next week I will post my analysis on whether or not I should refinance my 6.1% mortgage based on my amortization schedule that I’ve calculated.