Should you be a senior citizen considering a reverse mortgage currently, it is natural in case 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 in the financial markets nowadays is unprecedented.
However, your fear is not really justified. Reverse mortgages and the lenders that offer them are not portion of the sub-prime credit crises.
This segment in the market did not take part in originating the risky loans that have came up with chaos on Wall Street and also the unprecedented number of foreclosures on Main Street. Reverse mortgage lenders are certainly not at risk of having to take note of huge losses on their own reverse mortgage loan portfolios. Therefore, in the event you are in need of reverse mortgage Medford OR currently you must not be deterred by scary sound-bites on the nightly news.
The matter though, is the fact that public, especially seniors, usually are not differentiating between both of these market segments. Recently I actually have heard several senior homeowners say things such as; “I might never think about obtaining a reverse mortgage now, with everything else that is occurring.” Or “I can’t obtain 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 by helping cover their the bath water. Reverse mortgages are totally different from traditional conventional “forward” mortgages. A reverse mortgage as well as a forward mortgage are certainly not exactly the same thing. You must not dismiss out of control, the idea of getting a reverse mortgage at the moment, simply because the item name has got the word “mortgage” inside it.
Firstly, reverse mortgages require no monthly obligations or repayment of any kind, provided that the senior lives in the house.
Consequently, you can never lose your property to foreclosure for insufficient payment. The reality is that numerous seniors have actually saved their properties from foreclosure by getting a reverse mortgage to change a traditional forward mortgage they had difficulty making payments on. As long as you keep your property and pay your home taxes, your property is virtually foreclosure proof by taking out a government insured reverse mortgage loan.
Secondly, if you get a HECM (Home Equity Conversion Mortgage) it is insured by FHA (Federal Housing Administration.) What which 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 at all, the FHA insurance fund steps in to make sure that you still get the money and benefits from your reverse mortgage.
A third safety feature of reverse mortgages, is that anyone thinking about trying to get this sort of loan must first complete HUD counseling. HUD counseling is supplied by FHA/HUD approved non-profit credit guidance agencies that are not properties of or affiliated with lenders. The counseling covers the pros and cons of reverse mortgages and indicates possible alternatives that seniors should look into as opposed to a reverse mortgage. HUD counseling is cost-free to the senior and will be conducted face-to-face or by telephone. Seniors should have adult children, trusted advisors or anyone that might help with their decision, attend the counseling session also. Following the senior completes the counseling, a certificate is issued which has to be given to the financial institution before an application for a reverse mortgage can be processed.
Even though it is understandable that the general public thinks that now could be not the best time to think about any type of mortgage, it really is certainly not true when the mortgage you are thinking about is a reverse mortgage. In reality, getting this type of loan sooner as opposed to later could really be an advantage. The reason is that a vital ingredient in determining the amount of money you kbfshn receive from the reverse mortgage hinges on the amount of equity you have in your house. If your property is declining in value because of the current housing and credit crises, you are going to realize a reduced benefit amount from a if your house is worth less later on than it is today.
In essence, don’t let fear or anxiety about the unknown keep you from teaching yourself about this unique financial planning tool if you think a reverse mortgage is something that may assist you. Furthermore, usually do not let friends and neighbors influence your decision unless they may be experts on the topic. Education and solid facts are how you can make a knowledgeable decision. Do not pay attention to rumors or nay sayers if you believe you could possibly improve your lifestyle by getting a reverse mortgage.