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reverse mortgage


Reverse Mortgages
Are you house rich and cash poor? Do you want to have extra money for daily and housing expenses? In the past, you essentially had two options. First, you could sell your home and move. Second, you could borrow against your home and then face monthly loan repayments. Today there is a third possibility - a reverse mortgage.
Read more at Colorado State University

A mortgage is a device used to create a lien on real estate by a contract. The Mortgage is an instrument that the borrower called the mortgagor uses to pledge real property to the lender called the mortgagee as a security for a debt, also called hypothecation. The Mortgage instrument contains the mortgage, which is the pledge, and the note, which is the actual evidence of the debt and promise to repay and is sometime called a promissory note. To pretect the lender, a mortgage is recorded in the public records creating a lien. The order of recording determines the priority of liens.

History
At common law, a Mortgage was a conveyance that on its face was absolute and conveyed a fee simple estate, but which was in fact conditional, and would be of no effect if certain conditions were met --- usually, but not necessarily, the payment of a debt by the original landowner. Hence the word "mortgage," Law French for "dead pledge;" that is, it was absolute in form and in theory required no further steps to be taken by the creditor.
In many U. S. states, however, a mortgage has been converted by statute to a device for creating a security interest in land. When the landowner fails to perform on the obligation secured by the mortgage, the mortgage holder must file a foreclosure to cause the property to be sold at auction, usually by the sheriff. Since mortgage debt is often the largest debt owed by the debtor, banks and other mortgage lenders run title searches of the real property to make certain that the lien of the mortgage is prior to anyone else's claim.

Mortgage finance industry
Mortgage lending is a major category of the business of finance in the United States of America. Mortgages are commercial paper and can be conveyed and assigned freely to other holders. In the USA the Home Owners Loan Corporation, the Federal Housing Administration administer the programmes colloquially known as "Ginnie Mae" and "Freddie Mac" to foster mortgage lending and thus to encourage home ownership and construction.

Mortgage Loan types
There are many types of mortgage loans. The two basic types of amortized loans are the fixed rate mortgage (FRM) and adjustable rate mortgage (ARM).
In a FRM, the interest rate, and hence monthly payment, remains fixed for the life (or term) of the loan. The term is usually for 15 or 30 years.

In an ARM, the interest rate will periodically (annually or even monthly) adjust up or down to some market index. Adjustable rates transfer part of the interest rate risk from the lender to the borrower, and thus are widely used where unpredictable interest rates make fixed rate loans difficult to obtain.

A partial amortization or balloon loan is similar to a FRM, but the balance is due at some point short of the full term.


 
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