Home Equity Line of Credit

A Home Equity Line of Credit (HELOC) can be dangerous and we descibe what to watch out for below.
Home Equity Line of Credit is abbreviated as HELOC. This refers to a loan in which the lender agrees to lend a maximum amount within an agreed period. This differs from standard loans or a reverse mortgage because the borrower is not advanced the entire sum up front, but uses the line of credit to borrow sums totaling no more than the amount.

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Reverse Mortgage Information

A Reverse Mortgage is known as a Home Equity Conversion Mortgage and abbreviated as HECM. This refers to a loan in which the lender agrees to lend a maximum amount within an agreed period. This differs from standard home loans (the heloc) because the borrower is giving up their home (they still reside there) in return for monthly payments, hence; reverse mortgage.
At first, a reverse mortgage sounds like a great idea, but you or your parent(s) may actually be falling for a scam.
The housing market is bad right now and rather than try to sell your house, a reverse mortgage (selling your house to the bank) seems attractive to most; what you’re not seeing is that many mortgage companies will pay you a monthly amount that doesn’t begin to add up to the real worth.
You spend your life trying to pay off your mortgage, and just when you do, some shady con-artist is there ready to take your home and more using a reverse mortgage. Some of the safest reverse mortgages are HUD/FHA reverse mortgages, but in general, it’s better to focus on 401k planning and long term retirement rather than wait and attempt a reverse mortgage.

Reverse Mortgage

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Avoid Private Mortgage Insurance

PMI (Private Mortgage Insurance) (what I consider a rip off!) is an amount you have to pay it if you put down less than 20% on a new mortgage. I think of PMI as a penalty, because you never get the money back, you simply shell out cash to the lender.
Mortgage companies claim that it’s a form of protection for them, in case you default on your home loan. Many companies abused this protection and would make it extremely difficult to cancel the PMI, in fact, they abused it to the point that the government had to jump in and pass a law to stop this behavior.
It’s called the Homeowner’s Protection Act of 1998 or PMI Act and requires lenders to allow home owners insured after July 29, 1999 and who meet specified requirements to have their PMI canceled. If you received private mortgage insurance before then, you need to contact your lender for more information.

Private Mortgage Insurance

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