If you are a senior citizen considering a reverse mortgage at the moment, it is natural if 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 within the stock markets these days is unprecedented.
However, your fear is not really justified. Reverse mortgages and the lenders that provide these are not portion of the sub-prime credit crises.
This segment from the market failed to take part in originating the risky loans which have came up with chaos on Wall Street and the unprecedented number of foreclosures on Main Street. Reverse mortgage lenders are certainly not at risk of needing to jot down huge losses on their own reverse home loan portfolios. Therefore, in the event you are in need of reverse mortgage 97501 currently you should not be deterred by scary sound-bites on the nightly news.
The issue though, is that the general public, especially seniors, are not differentiating between those two market segments. Recently I actually have heard several senior homeowners say such things as; “I would personally never take into consideration acquiring a reverse mortgage now, with everything else that is occurring.” Or “I can’t get a reverse mortgage now and risk my the place to find foreclosure in today’s’ market.”
Thinking by doing this is much like throwing the child out with 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. You must not dismiss out of control, the idea of getting a reverse mortgage at this time, because the item name has got the word “mortgage” within it.
Firstly, reverse mortgages require no monthly installments or repayment of any sort, provided that the senior lives in the house.
Consequently, you might never lose your property to foreclosure for insufficient payment. The truth is that lots of seniors have actually saved their houses from foreclosure by getting a reverse mortgage to change a conventional forward mortgage that they had a hard time making payments on. So long as you maintain your property and pay your property taxes, your house is virtually foreclosure proof if you take out a government insured reverse home loan.
Secondly, if you get a HECM (Home Equity Conversion Mortgage) it is insured by FHA (Federal Housing Administration.) What that means for you personally, in light of the current bank losses and hedge fund failures, is that if your lender would go out of business for any excuse, the FHA insurance fund steps in to ensure that you continue to have the money and benefits from your reverse mortgage.
One third safety feature of reverse mortgages, is the fact that anyone considering trying to get this type of loan must first complete HUD counseling. HUD counseling is provided by FHA/HUD approved non-profit credit guidance agencies which are not properties of or connected to lenders. The counseling covers the advantages and disadvantages of reverse mortgages and highlights possible alternatives that seniors should consider as opposed to a reverse mortgage. HUD counseling is free of charge towards the senior and can be conducted in person or by telephone. Seniors should have adult children, trusted advisors or anyone that can help using their decision, attend the counseling session also. After the senior completes the counseling, a certificate is distributed which has to be given to the lending company before an application to get a reverse mortgage can be processed.
Though it may be understandable that most people thinks that is now not a great time to consider any sort of mortgage, it is actually not at all true when the mortgage you are planning on is really a reverse mortgage. Actually, getting this type of loan sooner instead of later could really be a benefit. This is because a vital ingredient in determining how much cash you kbfshn receive from a reverse mortgage hinges on the amount of equity you have in your home. If your house is declining in value because of the current housing and credit crises, you may realize a lower benefit amount from a if your home is worth less down the road than it is 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 a thing that will assist you. Furthermore, usually do not let friends and neighbors influence your final decision unless they may be experts on the topic. Education and solid facts are steps to make an educated decision. Tend not to listen to rumors or nay sayers if you think you might be able to boost your lifestyle by getting a reverse mortgage.