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Exclusively Inverness Magazine - Winter 2008
What's Hiding in Your Home Loan? By Tom CramerFive Factors Every Homeowner Should Know to Maximize Mortgage Management
 A study released by Countrywide
Home Loans, a division of Countrywide
Bank, FSB, revealed that
many homeowners may not be
fully capitalizing on the powerful
fiscal opportunities within their
homes. Ninety percent of survey
homeowner respondents admitted
that their home is one of their
most important assets, yet nearly
half indicated they would never
consider leveraging their mortgage
and available equity as a financial management tool.
These findings suggest that Americans may be neglecting to
recognize their home as an asset that can—and should—be
managed like other investments in their portfolios. Survey
results also underscore the widespread misperceptions that
exist about mortgages, including how they work, their flexibility,
and their place in an individual's overall financial
package.
When it comes to stocks, for example, it's considered obvious
for Americans to keep an eye on and take action on their
investments to maximize growth potential, but the same
doesn't seem to hold true for their homes. Instead, many
homeowners simply stick with their original mortgage, even
if it may not make the most sense to do so.
To empower homeowners with strategies that can help them
maximize and effectively manage their mortgages, Countrywide
imparts a few options worth checking out:
- Cash In on Cash-Out—For Upgrades and More.
Increased home values over time may mean that many
people's home equity has grown significantly. So, the
time may be right for them to consider refinancing and
pulling money out of their home equity in a lump sum to
fund repairs, renovations or other expenditures. After all,
any upgrades made may add to their home's value in the
long run. A cash-out refinance could be a smart solution
that may make the most of their investment by generating
a source of funds needed to meet personal and financial
goals.
- Consider Your Best Interest—Changing and Deferred.
If a homeowner currently has an adjustable rate mortgage
(ARM), they should be sure to monitor their monthly
statement, understand how the loan's interest rate is changing,
and pay attention to deferred interest on option ARM
products. When these rise outside of homeowners' comfort
zones, it may be a wise move to refinance with a different
loan that has a lower rate, a fixed payment, a different loan
term, or other features that make the most sense in their current
financial situation. Making a move to refinance when
the time is right could save money in the long run or in the
short term, depending on their needs.
- Help Yourself to Seconds—Vacation Homes and Investment Properties.
In recent years, many homeowners are using the equity from
their first home to springboard into a second home or other
investment property. This can be an excellent way to maximize
their current investment to build assets and bolster their
financial portfolio.
- Move Ahead with Reverse Mortgages—Payments and Peace of Mind.
For homeowners who are at least 62 years old, a reverse
mortgage can be a great and simple way to access available
equity in a home and obtain a source of funds for everything
from daily expenses and medical bills to maintaining a leisurely
retirement lifestyle. There are generally no restrictions
on how borrowers can use the loan proceeds, which usually
can be obtained in a lump sum, monthly, through a line of
credit, or other payment structures.
A reverse mortgage enables seniors to remain in their homes
for the remainder of their lives if they wish. And, funds
received from a reverse mortgage are generally categorized
as loan advances and not taxable income (borrowers should
consult their tax advisors for details). Reverse mortgages
also are usually “non-recourse,” which means that the borrower,
their heirs, or their estate will not owe more than the
appraised market value of the home at the time of maturity
of the loan, even if the loan balance is higher.
Borrowers should obtain as much information as possible
before obtaining a reverse mortgage and consult with their
family, a financial or tax advisor, and other resources to fully
explore all of their options so they can make an informed
decision that's right for them.
For more information about these and other smart mortgage
management tips, homeowners should call Tom Cramer at 847-381-6521.
Tom Cramer is the home loans sales manager of the Barrington office of Countrywide Home Loans, a division of Countrywide Bank, FSB. The office is located at 1250 S. Grove Ave #100. | | | | | |
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