Second Mortgage

Most people answering are getting confused.

There are two types of loans out there: Reverse Mortgages and Negative Amoritization Mortgages.

Reverse Mortgage are only for people 62 years or greater and they can be a great way to go. Increases cash flow, eliminates monthly payment.

The best part of them is that if you owe more than the house is worth, you don’t need to pay it back. The home can not be foreclosed on.

But you have to consider carefully all the ramifications of a reverse mortgage. Eventually the bank will own your home, so you have to make sure that the income will last long enough for you not to run into a problem.

However, if you are old enough and you don’t want to leave it for your family, it can make a difference in the style in which you live.

Negative Amoritazation loans are totally different. Mortgage Brokers try to sell them because they are an extremelly low monthly payment and the start rate is around 1%.

The problem is that the interest goes on the back side of the loan and needs to be paid back or you lose your house. Not only that, but the 1% is only good for 1 month. After that you are looking at 7.5% to 8%. Not good!

If used in the right way, a neg am loan can help certain people: self employed, commission sales, but that is about it. You need to understand what you are getting yourself into.

The best advice: ask a ton of questions to your loan officer!