A reverse mortgage is a loan that is specifically meant for home owners. They can take out the loan based off of the fact that you have equity in your home. Instead of you paying for your mortgage, you will be getting a pay check from owning your home.

There are multiple ways that you can choose to receive your payments. If you choose to get your payments through tenure, you will receive an equal amount each month as long as one person is still occupying the home.

The other major way to receive a mortgage is through a line of credit. If you choose this option, you are allowed to take out the amount of money that you want until your line of credit has run out. This can be a better option for someone who wants to control when and how much money they get. It can be an especially helpful tool for home owners who have paid their monthly mortgage for years, and need a little extra cash now.

The amount of money that you can borrow through a reverse mortgage depends on a variety of factors. Despite the facts that everyone has to be at least 62 years or older in order to qualify for a reverse mortgage, your age will still impact the amount that you can borrow.

If you are on the younger side, you probably won’t be able to take out as someone who is on the older side. Another factor that considers how much you can borrow is the current interest rate. Finally, the estimated value of your home and the fraction that you have paid will impact how much money you can borrow.

Qualifications:

Age- In order to qualify for a reverse mortgage loan, you have to be at least 62 years old.

Type of home- Your home has to be either a single family home or a 2.4 unit home (at least one unit has to be owned by the borrower). There are also some condominiums that can qualify for a reverse mortgage.

Misconceptions:

Sometimes people confused a reverse mortgage loan with a home equity loan. However, they differ because a home equity loan requires you to have a steady income. A home equity loan will also require the borrower to pay a monthly fee based off of the interest. When you have a reverse mortgage, you are required to pay three main things.

This includes the property’s taxes, utilities, and flood/hazard insurance premiums. Another common misconception about reverse mortgages is that you cannot change your mind after closing. The truth is that you actually have 3 days after closing the loan if you want to cancel the reverse mortgage. This regulation is referred to as the “right of rescission”.

A reverse mortgage loan can be an awesome option for a home owner who is in need of some cash. When it comes to how much money you can borrow, you will be able to borrow more if you are older and the interest rates are lower.

home-loans

With over a trillion dollars of assets under management to date, ETF products are a significant driver of investment prices.

However, while investment markets are already so highly driven by macro-economic policies, the rise of the ETF has also contributed to the increased correlation of investment returns across different asset classes, and therefore made it even more difficult for a careful investor to make a respectable return on the overall market. Because of the way in which market correlations constrain today’s investment markets so heavily, we need to be able to understand how it is that ETF investments are distributing market returns throughout the market, and how we can adapt to that constraint.

ETFs increase asset correlations mainly because of the way in which they are so tightly bound by their portfolio guidelines. For example, while a Mutual Fund is allows a small amount of leeway in their portfolio holdings, and can therefore over or under allocate their positions based on their returns and analysis, ETFs are required to maintain their portfolio holdings in accordance to their investment mandate. The end result is that an ETF must re-balance itself at the end of the trading day.

This means that the fund will need to sell off excessive growth, and average down on losing positions in the portfolio. With so many different funds of varying different sizes, the end result is that the gains from those positions that over-perform are then effectively reduced at the end of the day, while the losses of under-performing securities are also reduced. The effectively makes for a flatter performance across the entire market, but also means that different asset classes will also begin to perform similarly.

What happens when a fund that holds mainly Apple shares needs to sell off its position in Apple to balance out the rest of the portfolio? The grouping of stocks that didn’t actually realize any gains that day will be bought up, and Apple, which performed very well that day, will be pared down. This illustrates how it is that the correlation can create the perception of a performing market, when really it is simply a few positions that are carrying the market higher through ETFs.

The end result of this kind of correlation is two main outcomes: firstly, we’ll see that there is a perceived threat to the markets from the tied responses, because it creates an apparent lack of transparency. In order to combat this lack of transparency, investors start to move into assets that do not trade on an exchange, such as real estate or private equity holdings. The second trend that emerges is an increase in short-term volatility on a daily basis.

Specifically, as ETFs correct their portfolio holdings at the end of the day, a great deal of trading will take place in assets that would not normally have a reason to change in value, or might perhaps be moving in a counter-intuitive direction given the day’s movements.

As ETFs adjust the market prices of securities in accordance to their portfolios, rather than the actual value of the investment, there will come a seemingly sporadic short-term movement in the equity markets at the end of the day that can mislead investors into thinking that there is perhaps something going on with the position itself. While such an adjustment will arguably correct itself over time, it is somewhat stressful to watch a stock rise on good news, and then decline quickly at the end of the day simply because an ETF position needed to adjust its overall holdings.

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