Net Equity Financial Incorporated is a financial services company that focuses on mortgage services.
Forward Mortgage Options:
A fixed-rate mortgage is a home loan in which the interest rate will remain the same through the life of the loan for the original borrower. The most common fixed-rate mortgage terms are 15 or 30 years, but loans may also be available for 10, 20 and 25 years.
Fixed rate mortgages are characterized by their interest rate (including compounding frequency, amount of loan, and term of the mortgage) and are known for their ease of straightforwardness among borrowers. Unlike adjustable rate mortgages, fixed rate mortgages are not tied to an index. Instead, the interest rate is set to an advertised rate, usually in increments of 1/4 or 1/8 percent.
Fixed rate mortgages are usually more expensive than adjustable rate mortgages. Long-term fixed rate loans will tend to be at a higher interest rate than short-term loans because of increased risk.
- 30-year fixed rate
- 15-year fixed rate
- 10-year fixed rate
- 20-year fixed rate
- 25-year fixed rate
Adjustable Rate Mortgage (ARM)
An adjustable-rate mortgage (ARM) is a home loan in which the interest rate changes periodically based on a standard financial index. ARMs generally permit borrowers to lower their initial payments if they are willing to assume the risk of interest rate changes. They transfer part of the interest rate risk from the lender to the borrower, who benefits if the interest rate falls but loses if the interest rate increases. This creates the risk of financial hardship to the borrower. To limit this risk, most ARMs have caps on how much an interest rate may increase over the initial term and life of the loan.
A conventional loan is a mortgage loan which meets the underwriting guidelines of Federal National Mortgage Association (FNMA), known as Fannie Mae; or Federal Home Loan Mortgage Corporation (FHLMC), known as Freddie Mac, as opposed to a government-backed loan. Generally, conventional loans require a higher down payment than government loans and are limited to a certain amount (currently $417,000).
Non-Conforming Loans (Jumbo)
A non-conforming loan, also known as a jumbo loan, is a mortgage loan which exceeds the maximum loan limits established by Fannie Mae and Freddie Mac. The down payment and average interest rates on jumbo mortgages are typically higher than for conforming mortgages.
Government Loan Programs
A FHA Loan is a government mortgage loan partially insured by the Federal Housing Administration, which covers lenders in most losses if a borrower defaults. FHA loans have historically allowed buyers to borrow money for the purchase of a home that they would not otherwise be able to afford. Typically, a reduced down payment of 3.5 percent is required.
A VA loan is a government mortgage loan guaranteed by the U.S. Department of Veterans Affairs (VA) and issued by qualified lenders. VA loans are made to active duty and honorably discharged veterans and their un-remarried widows or widowers. VA loans require a minimal or no down payment and offer lower interest rates.
A reverse mortgage is a loan available to people over 62 years of age that enables a borrower to convert part of the equity in their home into cash.
Reverse mortgages were conceived as a means to help people in or near retirement and with limited income use the money they have put into their home to pay off debts (including traditional mortgages), cover basic monthly living expenses or pay for health care. There is no restriction on how a borrower may use their reverse mortgage proceeds.
The loan is called a reverse mortgage because the traditional mortgage payback stream is reversed. Instead of making monthly payments to a lender (as with a traditional mortgage), the lender makes payments to the borrower.
The borrower is not required to pay back the loan until the home is sold or otherwise vacated. As long as you live in the home, you are not required to make any monthly payments towards the loan balance, but you must remain current on your tax and insurance payments.
With a reverse mortgage, you always retain title to or ownership of your home. The lender never, at any point, owns the home even after the last surviving spouse permanently vacates the property.
The amount of funds you receive depends on the age of the youngest borrower, the value of the home, the interest rate and upfront costs. The older you are, the more proceeds you can receive.
The funds can be delivered to you as a lump sum, as a line of credit or as fixed monthly payments, either for a fixed amount of time or for as long as you remain in the home. You can also combine these options, for example, taking part of the proceeds as a lump sum and leaving the balance in a line of credit. Your choices vary by whether you choose a fixed rate option (which you must take a lump sum) or an adjustable rate (the options listed above are available.) Talking with an experienced reverse mortgage professional will help you make the decision that is best for you and your family.
Fees can be paid out of the loan proceeds. This means you incur very little out-of-pocket expense to get a reverse mortgage. Very low-income homeowners are exempted from being charged for counseling.
Your final loan balance is comprised of the amount borrowed, plus annual mortgage insurance premiums, servicing fees and interest. The loan balance grows as you live in the home. In other words, when you sell or leave the house, you owe more than you originally borrowed. Look at it this way: A traditional mortgage is a balloon full of air that loses some air and gets smaller each time you make a payment. A reverse mortgage is an empty balloon that grows larger as time passes.
No matter how large the loan balance, you never have to pay more than the appraised value of the home or the sale price. This feature is referred to as non-recourse. If the loan balance exceeds the appraised value of the home, then the federal government absorbs that loss. The government pays for it with proceeds from its insurance fund, which you as a borrower pay into on a monthly basis.