17 reverse mortgage facts you should know

Baby Boomers are not prepared for retirement. Business Insider does a good job of describing the problem: few seniors have enough savings for retirement, and that’s consistent across generational groups, race, and political affiliation.

However, when looking at data from the 2013 American Housing Survey, one thing is clear – America’s seniors own homes. According to the survey, over 65% of senior homeowners own their house outright. On average, they carry a significant amount of home equity – nearly $130,000.

Is a reverse mortgage a good idea?

Considering these two facts together, I foresee a boom in reverse mortgages on the horizon. A home equity conversion mortgage (HECM), often called a reverse mortgage, allows retirees to cover large expense using home equity, increase their monthly income, or both. Some seniors may not have a choice in the matter.

If the use of reverse mortgages becomes widespread, it’s important to learn a little bit about how they work. This isn’t just the work of seniors. I fall into the millennial demographic and I consider this everyone’s problem.

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Where is the best place to put a carbon monoxide detector?

Carbon monoxide poisoning kills thousands of people and is easily preventable! Maybe you’re moving into a new home, or you’ve gone through our review of the best carbon monoxide detectors and bought yourself a new unit. The next logical question is where is the best place to put a carbon monoxide detector? You want to find a place that will make sure the carbon monoxide detector is most effective, will keep you and your family safe, and won’t add an eyesore to your room.

Install carbon monoxide detectors in locations where you spend the most time

Ideally, you must have CO detectors placed in your home just like the number of smoke alarms you have installed. You must place a carbon monoxide detector in every major area of your house including the kitchen, dining/living room, office, and bedrooms. If you are living in a multi-story home, see to it that you place at least a carbon monoxide detector on every level.

Since people are most vulnerable to carbon monoxide poisoning effects while sleeping, it is crucial to place alarms near the bedrooms of your family. If you have one carbon monoxide alarm, place this as close to the sleeping area of everybody if possible. If you have elderly family members or children living with you, give extra protection near their rooms since they’re the most at risk of carbon monoxide poisoning.

Install alarms in the highest risk areas

You’ll want to place carbon monoxide alarms near any sort of appliance that can leak or generate carbon monoxide. If your furnace is at the basement, see to it that you place a carbon monoxide detector there. If you have gas clothes dryers you should consider putting alarms in your laundry room. You should also place one in the garage if you always park your cars there. Wherever you have solid fuel-fired appliance, anything that might produce carbon monoxide must have a carbon monoxide detector

Avoid installing carbon monoxide detectors on the ceiling

Smoke and heat rise. This is the reason why people should place importance on installing smoke alarms on the ceiling or wall. However, carbon monoxide mixes with the air. Because it does not rise, it’s preferable to install carbon monoxide detectors or alarms at knee level, which is the right height of a sleeping person’s mouth and nose. For this reason, a carbon monoxide alarm with a single function is highly recommended. If you’re installing a dual smoke and carbon monoxide detector, place this on the ceiling so it may detect smoke. But we also recommend purchasing an additional single-function CO detector to place in your home and ensure you’re covered.

Find a place to avoid tampering

If you have pets or kids that could tamper with detectors, you can move these up to chest height. You may also place them in an area that is hard to reach where curious hands or overzealous tails would have a hard time reaching.

Keep the sensors unblocked

Keep in mind that a carbon monoxide detector must not be blocked by curtains, furniture or some objects because restricted airflow may affect its function.

Maintain your carbon monoxide alarms

Your carbon monoxide alarms are generally low maintenance, but they will need some attention. Thankfully when there’s an issue they’ll usually tell you! When they need attention they will chirp, when a carbon monoxide detector beeps it could mean a few things. First and foremost check the power supply. Your detector might be wired directly into the electrical system of your house, but most detectors have a battery that serves as a backup. These batteries will need to be replaced, in our home maintenance checklist we suggest checking the batteries quartly.

Another thing worth noting is your carbon monoxide detectors don’t last forever. The sensors used to detect carbon monoxide gas get less sensitive over time and can lose their effectiveness. Most detectors last 5 to 7 years, we recommend replacing anything older than 5 years old to ensure your family is protected in case of a carbon monoxide leak.

 

Mortgage Interest Rate vs APR – What is the difference?

If you’ve ever taken a loan or applied for a credit card, you’ve probably seen the term annual percentage rate or APR. When it comes to mortgages the APR is a percentage, it’s usually right next to the interest rate and looks awfully similar. You might find yourself thinking “what’s the difference between the mortgage interest rate and APR?” You’ve come to the right place, we’re here to help!

 

Are interest and APR the same thing?

Let’s get this out of the way at the start – annual percentage rate (also known as APR) and interest rate are not the same things. This can be confusing because they’re very related, and they’re often presented together. They are very different numbers, however, and they serve different purposes.

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Debt to Income Ratio | Mortgage Process Explained

When underwriting a mortgage, lenders try to understand whether or not you’ll be able to afford your new mortgage payment. They care more about your monthly debt payments than they do your total amount of debt. To understand your ability to repay your debt, lenders will check your debt-to-income ratio.

Debt-to-income ratio defined

Also known as a DTI ratio, this is a monthly analysis of how much of your income goes towards paying your debts. For a mortgage to be affordable, there needs to be enough room in your monthly budget to cover your living expenses and still satisfy the debt payments for your credit cards, mortgages, and any other debts you might have. Read More

Cash to Close | Mortgage Process Explained

When it comes to saving for a home most people focus on saving for a down payment. While your down payment is a big part of determining your home affordability, it’s not the only component. Between closing costs, fees & taxes you can expect to pay an additional 2-5% of your home price at the closing table. In many cases, some or all of these closing costs must be paid at the time of closing your loan. Your cash to close your loan includes BOTH your down payment and any closing costs.

So what’s included in the closing costs? And how do you calculate your cash to close?  Read More

Underwriting Your Property | Mortgage Process Explained

The type of property you choose can affect your home affordability, the interest rate you qualify for, and what loan products are available to you as a borrower. Underwriting the property is just as important and underwriting the borrower applying for a home loan. When trying to understand if a property is the right fit for a particular mortgage there are three major considerations: occupancy, property type, and homeowners association dues.

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Home Appraisal | Mortgage Process Explained

After you give the lender your intent to proceed they’ll order your home appraisal. This is a critical (and potentially frustrating) step in the home buying process. Let’s break down the entire home appraisal process, why it matters for the mortgage lender, and what it means for the home buyer and seller.

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How to put an offer on a house

Maybe you fell in love with the first home you saw. Maybe it took you months, but your patience was rewarded with a beautiful house that hit all the sweet spots. However long it took, you’ve now reached the moment of truth – you’re ready to make an offer on a house.

You knew this time would come, but what does “make an offer on a house” really mean?

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Pre-qualify vs Pre-approval: What’s the difference?

Before you start looking for a home in earnest, though, you should get pre-qualified for a loan. Ideally you’ll get pre-approved. To do that, you’re going to need to talk to a loan officer. What’s the difference between a pre-qualification letter and a pre-approval letter? And how can you find a good mortgage lender or loan officer to work with? Let’s break it down.

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Am I ready to buy a house?

Each homebuyer is different, and the next wave of first time home buyers has the potential to throw the mortgage banks for a loop. With hoardes of freelancers & contractors marching towards self-employment, or companies like Uber, Udemy, and AirBnB offering new, unprecedented ways to make money, income streams are less consistent and more diversified. After the financial crisis in 2008, many people rejected the use of credit cards and worked to eliminate debt. Some are even rejecting banks outright

alternative banking

Please, pretty pretty please, don’t ever use a video game store as a bank. Seriously.

These shifts create awesome new opportunities, and you should totally take advantage of them. But the mortgage lenders aren’t known for dealing with change well, and they haven’t really adapted to the new economic realities. Being self-employed or lacking credit history can make getting a home loan complex. Here are some common scenarios & what you can do to address the issue. Read More