Fixed Rate Home Equity Loans

Reverse mortgages harder to get. Is one right for you?

"We lost $175,000 in the stock market, and with income from our investments reduced, we said, 'OK, let's do something,' " Mr. Watson says. "Now with this amount of money, we're set for life."

Reverse mortgages let people age 62 and older convert home equity to cash without making monthly payments. They're attracting fresh attention as new options – and new warnings – emerge, and as the number of reverse mortgages falls for the first time in years. Debate now centers on whether the product is a versatile tool to help seniors of various means – or only an option of last resort.

With a reverse mortgage, a homeowner receives a lump sum, an equity line of credit, or a monthly payment in exchange for equity in the property. Unlike with a home equity loan, the reverse mortgage borrower makes no payments until the property changes hands. When the owner dies or sells, the lender collects proceeds from the sale. Between 550,000 and 600,000 households in the United States have reverse mortgages through private- sector companies, according to the National Reverse Mortgage Lenders Association (NRMLA) , an industry trade group.

The loan agreements can be complex, and options are expanding. Example: Homeowners may now choose a fixed rate rather than an adjustable rate, but the fixed rate applies only if they take their full loan amounts as a lump sum cash payment.

Another new option, termed a "saver" reverse mortgage, cuts upfront mortgage insurance premiums. By taking advantage of the saver, Watson paid $55 instead of $11,000 for mortgage insurance on his $550,000 home. Here again, though, there's a catch: The maximum amount one can borrow with a saver is 10 to 18 percent less than what's available through a standard reverse mortgage.

Many seniors welcome the prospect of breaking free from a monthly mortgage payment. A reverse mortgage can be a helpful tool for some of them, but they need to know the long-term consequences of using it, according to Barbara Stucki , vice president for home equity initiatives at the National Council on Aging , a nonprofit advocacy group based in Washington, D.C.

"People may have a false sense of security that somehow the mortgage is handled" with no payments due, Ms. Stucki says. "And it is – for today. But they're paying interest on that potentially large lump, and that [interest] is drawing down their equity. When it comes time for them to move, they may find there's nothing left.

A Guide to Fixed Rate Home Equity Loan | News Fire

Fixed Rate Home Equity Loan

Writer: Ernest Moore on Jun 19 2011.

Anyone who is interested in getting a home equity loan or line of credit for that matter is going to want to use a home equity line of credit calculator for one thing, which is going to help get the best rates. Home equity is the difference between price that you could sell at your home at, and the mortgage value of your home.

These are all things that you are going to have to think about if you want to get the best home equity line of credit rates.Homeowner could take the fixed rate home equity loan to consolidate the debt, usually the ones with higher rate such as high interest credit cards. Homeowners also take the fixed rate home equity loan to make the down payment for the investment property, or to buy another home. Another reason for taking the fixed rate home equity loan is to use a second mortgage in addition to first on home refinance or purchase.

Then you are going to need to take the time to compare between the different lenders to get the best home equity line of credit rates. Another benefit of taking the fixed rate home equity loan is that sometimes, it is an interest only loan, so that you make lower payment each month as you are only paying off the interest. The amount you can borrow depends on the equity value you have in your home and policies of the lender.

This is going to vary from one person to another. For instance you may already have a loan out from one company and do not want to go through them again.Understand about the prepayment penalties, and be aware of the maximum interest rate you can pay. Lenders providing such loans often get the fee at closing or when the loan is paid off early. There are few sites that can help you understand the truth about loans, ethical practices and borrower’s bill of rights. These sites make your search straightforward, and there are many tools that can help you make the informed choice when looking for the fixed rate home equity loan. Characteristics of fixed rate home equity loan vary depending upon the fees, interest rates, loan amount, repayment conditions and points. Compare different lenders to find out the loan that suits you best. You can also take help of home equity loan comparison chart to make the comparison.

You can get a home equity loan with a great interest rate as long as you shop around. If you are not able to refinance or repay your loan, then you might lose your home. If you miss the payment or make the late payment, it can trigger the foreclosure within 60-90 days.

Kiplinger's Personal Finance

The New Money Book of Personal Finance

Kiplinger's Personal Finance

Handbook of structured financial products

Kiplinger's Personal Finance