If you are a retiree and strapped for cash on that fixed income, you have a way out. You can always tap into the equity of your home with a reverse mortgage. A reverse mortgage can also be called an HECM, or home equity conversion mortgage. This is a special kind of home loan that
There are two main types of mortgage loans: there is a traditional second mortgage on your current home loan, or the reverse mortgage. Understanding how a reverse mortgage works will help you determine which loan type is best for you. By doing some online research on sites such as www.reversemortgagelendersdirect.com, one can get a good
Tampa is a beautiful city that buzzes with energy and beautiful, smiling faces. However, its housing market is pretty dismal. Trying to get a mortgage or refinance in Tampa can be as fun as getting a root canal. This is primarily due to the fact that Tampa was one of the hardest hit markets in
Everyone likes to own a piece of land they can call their own. This can be as shelter or as increasingly the case is turning out to be as a worthwhile investment. Real estate would include homes, offices, retail spaces, parking lots, apartments, warehouses, etc. It is a tangible, immovable asset. Insurance and pension funds
Standard financial theory left us woefully unprepared for the financial crisis of 2007-09. Something is missing in the theory. In the majority of loans the borrower must agree on an interest rate and also on how much collateral he will put up to guarantee repayment. The standard theory presented in all the textbooks ignores collateral.
This lecture reviews the intuition from the previous class, where the idea of dynamic hedging was introduced. We learn why the crucial idea of dynamic hedging is marking to market: even when there are millions of possible scenarios that could come to pass over time, by hedging a little bit each step of the way,
Suppose you have a perfect model of contingent mortgage prepayments, like the one built in the previous lecture. You are willing to bet on your prepayment forecasts, but not on which way interest rates will move. Hedging lets you mitigate the extra risk, so that you only have to rely on being right about what
A mortgage involves making a promise, backing it with collateral, and defining a way to dissolve the promise at prearranged terms in case you want to end it by prepaying. The option to prepay, the refinancing option, makes the mortgage much more complicated than a coupon bond, and therefore something that a hedge fund could
One of the assumptions of the classical immunization theory is that if the interest rates change, the same changes by same quantum across all periods of maturities of bonds. However, at many a occasions, the change in interest rates may not be uniform across all the periods of bond maturities. Thus, equating the duration of
In today`s time, when you start your search for a home loan, you will immediately get multiple offers from various banks claiming to provide you the best offer. What are the criteria for selecting whom to go with?