If you are a senior citizen considering a reverse mortgage currently, it is natural if you are a bit fearful about moving forward with your decision, given the current conditions in the mortgage and credit markets. The loss of confidence within the stock markets nowadays is unprecedented.
However, your fear is not really justified. Reverse mortgages as well as the lenders that offer them are not portion of the sub-prime credit crises.
This segment from the market did not participate in originating the risky loans who have created the chaos on Wall Street as well as the unprecedented quantity of foreclosures on Main Street. Reverse mortgage lenders usually are not in danger of needing to take note of huge losses on their reverse home mortgage portfolios. Therefore, in the event you may need reverse mortgages Medford OR currently you must not be deterred by scary sound-bites on the nightly news.
The problem though, is that the average person, especially seniors, are not differentiating between both of these market segments. Recently I have heard several senior homeowners say things such as; “I would never take into consideration obtaining a reverse mortgage now, with everything else that is going on.” Or “I can’t obtain a reverse mortgage now and risk my home to foreclosure in today’s’ market.”
Thinking in this way is much like throwing the infant by helping cover their the bath water. Reverse mortgages are very different from traditional conventional “forward” mortgages. A reverse mortgage as well as a forward mortgage are not at all the same thing. You must not dismiss out of hand, the idea of getting a reverse mortgage at this time, because the merchandise name provides the word “mortgage” in it.
Firstly, reverse mortgages require no monthly payments or repayment of any sort, as long as the senior lives in the home.
Consequently, you could never lose your home to foreclosure for absence of payment. The truth is that numerous seniors have actually saved their homes from foreclosure through getting a reverse mortgage to replace a regular forward mortgage that they had difficulty making payments on. Providing you keep your property and pay your home taxes, your property is virtually foreclosure proof by taking out a government insured reverse home loan.
Secondly, if you get a HECM (Home Equity Conversion Mortgage) it really is insured by FHA (Federal Housing Administration.) What that means for you personally, considering the recent bank losses and hedge fund failures, is that if your lender were to go out of business at all, the FHA insurance fund steps in to make certain that you carry on and get the money and benefits from your reverse mortgage.
A third safety feature of reverse mortgages, is the fact anyone considering trying to get this sort of loan must first complete HUD counseling. HUD counseling is provided by FHA/HUD approved non-profit credit guidance agencies which are not owned by or connected to lenders. The counseling covers the advantages and disadvantages of reverse mortgages and indicates possible alternatives that seniors should think about rather than a reverse mortgage. HUD counseling is totally free to the senior and can be conducted face-to-face or by telephone. Seniors should have adult children, trusted advisors or anyone that may help with their decision, attend the counseling session as well. Following the senior completes the counseling, a certificate is issued which has to be given to the financial institution before an application for any reverse mortgage could be processed.
Even though it is understandable that most people thinks that now is not a great time to think about any sort of mortgage, it really is definitely not true in the event the mortgage you are planning on is actually a reverse mortgage. Actually, getting this kind of loan sooner instead of later could sometimes be a benefit. This is because a key ingredient in determining the amount of money you kbfshn receive from a reverse mortgage hinges on the amount of equity you may have in your house. If your house is declining in value due to the current housing and credit crises, you will realize a lower benefit amount coming from a if your house is worth less later on than it is today.
The bottom line is, don’t let fear or anxiety about the unknown stop you from educating yourself relating to this unique financial planning tool if you feel a reverse mortgage is something that may benefit you. Furthermore, tend not to let friends and neighbors influence your final decision unless these are experts on the topic. Education and solid facts are how you can make an educated decision. Tend not to pay attention to rumors or nay sayers if you believe you could possibly enhance your lifestyle by obtaining a reverse mortgage.