If you are a senior citizen considering a reverse mortgage at this time, it is all-natural if you are a bit fearful about moving forward with your decision, given the present conditions in the mortgage and credit markets. The loss of confidence in the financial markets these days is unprecedented.
Nevertheless, your fear is not justified. Reverse mortgages and the lenders that supply them are not aspect of the sub-prime credit crises.
This segment of the market did not participate in originating the risky loans that have created the chaos on Wall Street and the unprecedented number of foreclosures on Key Street. Reverse mortgage lenders are not in danger of obtaining to create down huge losses on their reverse mortgage loan portfolios. As a result, if you are in have to have of a reverse mortgage at this time you should not be deterred by scary sound-bites on the nightly news.
The problem although, is that the general public, especially seniors, are not differentiating among these two industry segments. Not too long ago I have heard a number of senior property owners say items like “I would in no way assume about having a reverse mortgage now, with all the things that is going on.” Or “I can’t get a reverse mortgage now and risk my property to foreclosure in today’s’ market place.”
Considering this way is like throwing the baby out with the bath water. Reverse mortgages are totally distinctive from standard traditional “forward” mortgages. A reverse mortgage and a forward mortgage are not at all the very same thing. You should not dismiss out of hand, the concept of getting a reverse mortgage at this time, just because the solution name has the word “mortgage” in it.
Firstly, reverse mortgages demand no month-to-month payments or repayment of any sort, as extended as the senior lives in the home.
Consequently, you could by no means shed your residence to foreclosure for lack of payment. The reality is that many seniors have actually saved their homes from foreclosure by acquiring a reverse mortgage to replace a traditional forward mortgage that they had a challenging time producing payments on. As lengthy as you sustain your home and pay your house taxes, your home is practically foreclosure proof if you take out a government insured reverse mortgage loan.
Secondly, if you get a HECM (Property Equity Conversion Mortgage) it is insured by FHA (Federal Housing Administration.) What Reverse Mortgage Information indicates for you, in light of the recent bank losses and hedge fund failures, is that if your lender were to go out of enterprise for any explanation, the FHA insurance coverage fund actions in to make certain that you continue to obtain the revenue and advantages from your reverse mortgage.
A third security feature of reverse mortgages, is that anybody interested in applying for this sort of loan have to very first complete HUD counseling. HUD counseling is provided by FHA/HUD authorized non-profit credit counseling agencies that are not owned by or affiliated with lenders. The counseling covers the pros and cons of reverse mortgages and points out achievable alternatives that seniors should contemplate alternatively of a reverse mortgage. HUD counseling is absolutely free of charge to the senior and can be carried out in particular person or by phone. Seniors are encouraged to have adult youngsters, trusted advisors or everyone that may perhaps help with their decision, attend the counseling session as properly. Immediately after the senior completes the counseling, a certificate is issued which need to be presented to the lender prior to an application for a reverse mortgage can be processed.
Even though it is understandable that the general public thinks that now is not a excellent time to think about any sort of mortgage, it is certainly not true if the mortgage you are thinking about is a reverse mortgage. In reality, finding this variety of loan sooner rather than later could really be a advantage. The cause is that a essential ingredient in determining how substantially dollars you can get from a reverse mortgage hinges on the quantity of equity you have in your house. If your property is declining in value due to the present housing and credit crises, you will understand a decrease advantage amount from a if your household is worth significantly less in the future than it is currently.
The bottom line is, do not let worry or worry of the unknown avoid you from educating your self about this distinctive economic preparing tool if you feel a reverse mortgage is some thing that can advantage you. In addition, do not let mates and neighbors influence your choice unless they are specialists on the topic. Education and strong details are how to make an informed choice. Do not listen to rumors or nay sayers if you feel you may be able to boost your way of life by acquiring a reverse mortgage.