If you are a senior citizen considering a reverse mortgage at the moment, it is natural in case you are a bit fearful about moving forward with your decision, given the current conditions within the mortgage and credit markets. The loss of confidence in the stock markets these days is unprecedented.
However, your fear is not really justified. Reverse mortgages as well as the lenders that provide options are not part of the sub-prime credit crises.
This segment from the market failed to take part in originating the risky loans that have created the chaos on Wall Street and the unprecedented quantity of foreclosures on Main Street. Reverse mortgage lenders are certainly not in danger of being forced to write down huge losses on their reverse home loan portfolios. Therefore, if you require reverse mortgage 97501 at the moment you must not be deterred by scary sound-bites on the nightly news.
The issue though, is the fact that average person, especially seniors, are not differentiating between both of these market segments. Recently I actually have heard several senior homeowners say things such as; “I would personally never take into consideration obtaining a reverse mortgage now, with everything else that is occurring.” Or “I can’t obtain a reverse mortgage now and risk my house to foreclosure in today’s’ market.”
Thinking this way is like throwing the infant out with the bath water. Reverse mortgages are totally different from traditional conventional “forward” mortgages. A reverse mortgage along with a forward mortgage are certainly not exactly the same thing. You must not dismiss out of control, the concept of acquiring a reverse mortgage at this time, because the item name has the word “mortgage” inside it.
Firstly, reverse mortgages require no monthly installments or repayment of any kind, so long as the senior lives in the house.
Consequently, you can never lose your home to foreclosure for insufficient payment. The reality is that numerous seniors have actually saved their properties from foreclosure through getting a reverse mortgage to switch a conventional forward mortgage they had a hard time making payments on. So long as you maintain your property and pay your home taxes, your home is virtually foreclosure proof if you are taking out a government insured reverse home loan.
Secondly, when you get a HECM (Home Equity Conversion Mortgage) it is actually insured by FHA (Federal Housing Administration.) What that means for you, considering the recent bank losses and hedge fund failures, is when your lender were to fall out of business for any reason, the FHA insurance fund steps in to make certain that you still have the money and advantages from your reverse mortgage.
A third safety feature of reverse mortgages, is the fact anyone interested in trying to get this sort of loan must first complete HUD counseling. HUD counseling is provided by FHA/HUD approved non-profit credit counseling agencies which are not belonging to or affiliated with lenders. The counseling covers the advantages and disadvantages of reverse mortgages and points out possible alternatives that seniors should think about instead of a reverse mortgage. HUD counseling is free of charge towards the senior and may be conducted personally or by telephone. Seniors are encouraged to have adult children, trusted advisors or anyone that can help using their decision, attend the counseling session also. Right after the senior completes the counseling, a certificate is issued which has to be given to the financial institution before a software for a reverse mortgage could be processed.
Even though it is understandable that the general public thinks that now is not a great time to take into consideration any type of mortgage, it really is certainly not true when the mortgage you are thinking about is a reverse mortgage. In fact, getting this type of loan sooner instead of later could really be a benefit. This is because an important ingredient in determining the amount of money you kbfshn receive from a reverse mortgage hinges on the quantity of equity you might have at home. If your home is declining in value as a result of current housing and credit crises, you are going to realize a reduced benefit amount from the if your home is worth less down the road than today.
The end result is, don’t let fear or the fear of the unknown prevent you from educating yourself relating to this unique financial planning tool if you think a reverse mortgage is one thing that will assist you. Furthermore, tend not to let friends and neighbors influence your choice unless they are experts on the topic. Education and solid facts are steps to make an informed decision. Usually do not listen to rumors or nay sayers if you believe you might be able to improve your lifestyle by obtaining a reverse mortgage.