Debt Consolidation Loan

“I’m Credit Card Debt Free”

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If you have debt other than your mortgage, you are likely paying much more in interest than you should be. In fact, credit card interest rates can be as high as 25%. Refinancing your home under a debt consolidation loan could offer you one low interest rate and a much lower overall payment every month.

Consolidate Debt to do any of the following:

• Pay off credit cards
• Pay off student loans
• Pay off auto loans
• Pay off boat or RV loans
• Pay off medical expenses
• And more!

Using the equity in your home to lower your monthly bills and eliminate the hassle of numerous debts could be a smart maneuver. With credit card debt reaching all time highs in this country, you may want to consider a debt consolidation loan.

Tips to Help You Say Good-Bye to Debt

There is no single solution for getting out of debt. You did not get into debt overnight, nor will you get out of it that quickly.

These tips can help you take those crucial steps to financial freedom.

1. Stop accruing more debt: The more you continue to spend, the longer it will take for you to pay it off. Reduce your spending. If you have high interest credit cards, transfer the balance to ones with a lower APR. That way your debt won’t increase while as you’re paying it off.
2. Increase your income: If your current salary isn’t enough to cover the payments on your debt, get a second job. Even a few hours a week can make a huge difference. Look for flexible freelance work that will fit around the rest of your life.
3. Make a budget and stick to it: It easy to overspend when you don’t have a budget. Calculate how much you have to spend and stick to that limit. Write down all of your expenses so you know where your money is going.
4. Pay more than the minimum: If you only make the minimum payments each month, it will take you ages to pay off the whole debt. Instead, pay as much as you can each month. Every penny to put towards that debt will save you interest fees and get you one step closer to your goal.
5. Reuse and recycle: It’s environmentally sound and financially smart to reuse as much as you can.
6. Change your spending philosophy: Are you only buying the things you really need? Those impulse purchases may feel good at the moment, but in the long run, they will only get you further into debt. If you’re going to get out of debt, you will need to change your whole attitude to spending.
7. Get organized: Are you the sort of person who forgets to pay the bills on time? Late fees cost a fortune and are completely unnecessary. Get a calendar and write down when the bills are due. Then try to pay them a couple days early.
8. Make frugal friends: It’s difficult to stick to a budget when you’re surrounded by spendthrifts. Spend time with people who understand your goal and help you live within your means.
9. Set up an emergency fund: When you’re in debt, it’s hard to think about putting something aside for a rainy day. Every day feels like a downpour. But it’s crucial to have even a small emergency fund. Just make sure you don’t tap into it unless it’s truly an emergency.
10. Shop around: Take time to shop around. This doesn’t just apply to clothes and gadgets. Shop around for the best bank account, the best credit card, the best loan. There is no point in paying more than you have to.
11. Throw away your credit cards: If you don’t trust yourself to stick to a budget, get rid of all but one credit card. Keep that last one for emergencies, and only emergencies. That way you will not have the option to buy things that you cannot afford.
12. Stay busy: Many people shop out of boredom. Find some cheap hobbies and stay busy. Don’t spend all of your time watching TV. The adverts are designed to tempt you into spending money. Resist the urge.

Definition of reverse mortgage

A reverse mortgage is a low-interest loan for senior homeowners that uses a home’s equity as collateral. The loan amount is a percentage of the home’s value determined by the age of the youngest homeowner. The loan does not have to be repaid until the last surviving homeowner permanently moves out of the property or passes away. At that time, the estate has approximately 12 months to repay the balance of the reverse mortgage or sell the home to pay off the balance. All remaining equity is inherited by the estate. The estate is not liable if the home sells for less than the balance of the reverse mortgage.

Eligibility for a reverse mortgage (HECM)

To be eligible for a HUD reverse mortgage, the Federal Housing Administration (FHA) requires that all homeowners be at least age 62. You must own your home or have paid off approximately half of your mortgage balance. If you do have a mortgage balance, it can be paid off completely with the proceeds of the reverse mortgage loan at the closing (the moment which you sign the legal documents). There are no income or credit requirements for a reverse mortgage.

Eligible home types

Almost all home types are eligible. However, mobile homes must be built in the last 30 years, you must own the land, it must be on a permanent foundation, and it must meet an FHA inspection.

Difference between a reverse mortgage and a home equity loan

Generally a home equity loan, a second mortgage, or a home equity line of credit have strict requirements for income and creditworthiness. Also, with other traditional loans you must still make monthly payments to repay the loans. A reverse mortgage has no income or credit requirements and instead of making monthly payments, you receive payments.
With a reverse mortgage the amount you can borrow is determined by an FHA formula that considers your age, the current interest rate, and the appraised value of your home. The older you are, the lower the interest rate. The more valuable your home (up to a certain point), the higher the loan amount will be.
As stated previously, with traditional loans you are still required to make monthly payments, but with a reverse mortgage the loan is not due as long as you live in the home. Also, with a reverse mortgage you cannot be forced to forclose or forced to vacate your home because of a missed mortgage payment. However, you are still responsible for real estate taxes, utilities, and maintenance.

Outliving the reverse mortgage

You cannot outlive a reverse mortgage. As long as at least one homeowner lives in the home (keeping taxes and insurance current) you do not need to repay the loan. Furthermore, you will never owe more than your home’s value (a reverse mortgage can not become “upside down”).

Estate inheritance

In the event of your death or in the event that you no longer use the home as your primary residence, your estate can choose to convert the reverse mortgage into a traditional mortgage to keep the house or else sell the home to pay the balance (the cash borrowed, interest, and fees). If the equity in your home is worth more than the amount you owe to the lender, the remaining balance belongs to your heirs. No other assets are affected by a reverse mortgage. For example, investments, second homes, cars, and other valuable possessions cannot be taken from your estate to pay off the reverse mortgage. If the sale of your home is not enough to pay off the reverse mortgage, the lender must take a loss and request reimbursement from the FHA.

Loan limit

The amount that is available depends on three factors: age (older is better), current interest rate, and appraised value of the home.

Distribution of money from a reverse mortgage

There are several ways to receive the proceeds of a reverse mortgage and you can mix and match as needed.

• Lump sum – a lump sum of cash at closing.
• Tenure – equal monthly payments as long as you live in the home.
• Term – equal monthly payments for a fixed number of years.
• Line of Credit – take any amount you please at any time until the line of credit is exhausted.