Money Insights Tagged ‘Property Investment’
The Stigma Has Gone
Less than one hundred years ago the stigma of borrowing was palpable. Everyone was interested in making sure that they kept their debt commitments as low as possible. The idea of mortgage refinancing was virtually unheard of unless you were getting bankrupt and desperately needed some cash to avoid being sent to the debtor’s prison. Young people were encouraged to live within their means and only buy things that they could afford at the time without having to rely on a loan.
Things have drastically changed since those days. With the rise in income the banks have suddenly become more able to lend vast amount of money to businesses and people. Sometime this has led to dire consequences where people are unable to pay back the money that was lent to them. A credit rating is now one of the most prized assets for anyone living within the developed world and it appears that you do not have to do very much in order to obtain credit.
The Boomerang
The time bomb that was the credit crunch was born out of the refinancing boom that happened when people decided to use up the equity within their homes. Equity in a home is not a fixed metric that remains invariable whatever the circumstances. This was the case with the credit crunch. In order to arrive at a figure of equity, you need to make an educated guess at the price of the property in question within the constraints of the current market environment. Herein lays the danger because that price can be very arbitrary. It can depend on very fluid factors such the perception of the buyers.
Once you have filed for bankruptcy no one seems to be willing to lend you money. Since the credit scores are so low, that any lender or investor does not believe your capacity to repay it. In such a case, it is almost impossible to believe that you will get any type of financial help.
However, there is a way to recover your credibility in the market and continue your life normally. As soon as you file for bankruptcy, you cannot take up any loan, but if you take care of all your repayments and bills, and give no chance to the credit agency to have any complaints against you, then it is quite possible to recover your lost scores. The process might be a bit lengthy but is it manageable in less than two years. Furthermore, there are cases when you do not need to wait for the whole period of recovery, you can file for loans with some percentage of down payment. The requirement being quite the same, close watches at all the payments that are needed to be made.
Hence to get mortgage loans is not impossible, even if you have filed for bankruptcy.
The concept of Reverse Mortgage Loan has appeared on the horizon as a boon to the property owners, particularly senior 
citizens. The option enables them to keep their homes, receive payments from lenders as a big chunk, line of credit or a fixed frequency payment instead of having to dole out monthly mortgage payments. The concept demands that the mortgage loans will have to be repaid only after the last remaining borrower passes away, sells the property or permanently moves to another property.
In addition of extending the senior citizens an option to stay in their own homes, Reverse Mortgage also helps them as a valuable and reliable income source in case they lack liquid assets. However, one has to be a little vigilant in taking up this option. One must clearly understand the pros and cons of the entire process before committing oneself to Reverse Mortgage, and should not shy away from taking the advice of financial experts. Read the rest of this entry
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