Prepaying your mortgage can be a sensible thing to do, especially when you have idle savings (think cash or money market accounts not earmarked for specific financial goals or your emergency fund) earning less than the rate on your mortgage. In my previous article, I analyzed the mechanics of prepaying your mortgage. In effect, prepaying[Learn more…]
Mortgage
How Does Prepaying your Mortgage Actually Work?
When you make an extra payment on your mortgage, that money goes directly toward reducing the balance on your loan. Because of how the loan is structured, the extra payment triggers a cascade effect that speeds up the repayment of the loan. In what follows, I discuss the mechanics of your mortgage and illustrate exactly[Learn more…]
Reverse Mortgages, Part 2: Increasing financial flexibility by leveraging the equity in your home
In last month’s newsletter, I discussed reverse mortgages and attempted to clear up some common misconceptions about this product. As I explained, reverse mortgages are loans offered by a commercial lender to an age 62+ homeowner using a portion of their home equity as collateral. As long as the homeowner-borrower adequately maintains the home in[Learn more…]
Reverse Mortgages: Increasing financial flexibility by leveraging the equity in your home
If anyone had told me ten years ago that I would someday write favorably about reverse mortgages, I would have looked at them cross-eyed. Very few financial products have been the source of so much bad press and consumer misunderstanding. Variable annuities hold the top spot in this category. As with variable annuities, some of[Learn more…]