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Mortgages / Reverse Mortgages

Get Money Out of Your Home!

What is the difference between Mortgages vs. Reverse Mortgages?

What is a mortgage? A mortgage is a loan that a bank or mortgage lender gives you to help finance the purchase of a house. The house you buy will serve as collateral in exchange for the money you borrowing to finance the mortgage.

What is a reverse mortgage? Reverse mortgages differ from all other mortgages, in that the “lender” (financial institution) pays the “borrower” (the homeowner) in the form of a credit line, monthly payment, or a combination of those two options. With a reverse mortgage, a homeowner can borrow money from their home's equity (get a lump sum or monthly installments) and does not have to make any mortgage payments back to the bank until the borrower passes or the home is sold.

How to make money from your home: 

Here are 3 ways: 

1) Home Equity - is the difference between the appraised value of your home and how much of your mortgage you have left to pay off. To calculate equity, subtract any outstanding loan balances from the property’s market value. Home equity can increase over time if the property value increases or the loan balance is paid down.

There are two types of Home equity Loans:

Home Equity Loan - is a type of loan in which the borrower uses the equity of his or her home as collateral. The loan amount is determined by the value of the property, and the value of the property is determined by an appraiser from the lending institution. Home equity loans are often used to finance major expenses such as home repairs, medical bills, or college education. You get all of the money at once, and you repay with a flat monthly payment over the coming years. Your interest rate is usually fixed.

Home equity line of credit (HELOC) - allows you to pull funds out as needed. Similar to a credit card, you can borrow only what you need when you need it during the “draw period” (as long as your line of credit remains open). You’ll need to make modest payments on your debt during this time. After several years, your draw period ends, and you’ll go into a repayment period where you more aggressively pay off all of that debt.  HELOCs usually feature a variable interest rate.

2) Tax Breaks - The good news is you can deduct many home-related expenses. These tax breaks are available for any abode — mobile home, single-family residence, townhome, condominium or cooperative apartment. Most homeowners enjoy tax breaks even when they sell their residence.

  • Mortgage interest - Your biggest tax break is reflected in the house payment you make each month since, for most homeowners, the bulk of that check goes toward interest. And all that interest is deductible, unless your loan is more than $1 million.

  • Points - Did you pay points to get a better rate on any of your various home loans? They offer a tax break, too. The only issue is exactly when you get to claim them. The IRS lets you deduct points in the year you paid them if, among other things, the loan is to purchase or build your main home, payment of points is an established business practice in your area, and the points were within the usual range. Make sure your loan meets all the qualification requirements so that you can deduct points all at once.

  • Property Taxes - will be an annual deduction as long as you own your home. Property taxes must be deducted as an itemized expense on Schedule A.

3) A Home Equity Conversion Mortgage (HECM) - also known as a reverse mortgage, allows homeowners who are at least 62 years old to borrow against their equity without selling their home or making payments.

For more information about reverse mortgages: 

Talk to a reverse mortgage counselor. Find a HUD-approved counselor by visiting HUD’s counselor search page or calling HUD's housing counselor referral line (800) 569-4287.

There are Federal, State & Loval Programs available to help provide assistance with:
Mortgages Home Improvements Tax Deductions Energy and Utilities Government Loans Subletting Home Technology
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