Angela Mackinnon

CMI Mortgage #217909

The Facts and Fictions of Reverse Mortgages

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A reverse mortgage can be a powerful financial tool for homeowners aged 62 and older, providing access to home equity without the burden of monthly mortgage payments. If you’re considering this option, here’s a step-by-step guide to help you navigate the process.

Steps to Secure a Reverse Mortgage

  1. Meet with a Reverse Mortgage Specialist
    Before moving forward, consult with a professional to discuss your financial goals and determine if a reverse mortgage aligns with your needs. A specialist can explain the benefits, risks, and available options to ensure you make an informed decision.
  2. Complete HUD-Approved Counseling
    A mandatory counseling session with a HUD-approved agency is required. This ensures you fully understand the loan terms, repayment obligations, and how the reverse mortgage impacts your finances and heirs.
  3. Submit Your Application and Get Approved
    Once you decide to proceed, you’ll need to submit an application and provide necessary documentation. A financial assessment will be conducted to ensure you can meet loan obligations, such as property taxes, insurance, and home maintenance. Once all conditions are met, your loan moves to approval.
  4. Close and Access Your Funds
    After approval, you’ll finalize the loan through a closing process. You can then choose how to receive your funds, whether as a lump sum, line of credit, or monthly payments—based on your financial preferences.

What Heirs Need to Know

A reverse mortgage offers financial security for aging homeowners, but it’s essential for heirs to understand what happens when the borrower passes away.

Providing Peace of Mind

Reverse mortgages allow seniors to maintain their independence while reducing the financial strain on family members. This ensures they can continue living in their homes without relying on loved ones for financial support.

Handling the Home After the Borrower’s Passing

When the borrower is no longer living in the home, heirs have several options:

  • Sell the Property – The home can be sold, with proceeds used to pay off the loan. Any remaining equity belongs to the heirs.
  • Refinance the Loan – If heirs wish to keep the home, they can refinance the reverse mortgage into a traditional loan.
  • Walk Away Without Obligation – If the home’s value is less than the loan balance, heirs can choose to walk away, as reverse mortgages are non-recourse loans, meaning no additional financial responsibility falls on the family.

A reverse mortgage can be an excellent way for seniors to access their home equity while continuing to live comfortably. By understanding the process and educating heirs about their options, families can make well-informed decisions that benefit everyone involved.

Smart Strategies for Building an Emergency Fund

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Life is full of unexpected expenses, from medical bills to car repairs and even job loss. Having an emergency fund in place can help protect you from financial stress and prevent you from relying on high-interest loans or credit cards. If you don’t already have one, now is the perfect time to start building your safety net.

Why an Emergency Fund Matters
An emergency fund is a dedicated savings account meant to cover unexpected expenses such as:

  • Major home or appliance repairs
  • Car repairs or replacements
  • Unexpected medical bills
  • Job loss or reduced income

Without savings, many people turn to credit cards or loans, which can lead to more debt. An emergency fund provides peace of mind and financial stability when life throws a curveball.

How Much Should You Save?
Financial experts recommend saving three to six months’ worth of essential living expenses. This amount ensures you have enough funds to cover necessities if you lose your income or face a major expense. If that goal seems overwhelming, start small—any savings is better than none. The key is to begin and build over time.

Steps to Build Your Emergency Fund
1) Determine Your Savings Goal
To figure out how much you need, calculate your monthly expenses, including:

  • Rent or mortgage
  • Utilities (electricity, water, internet)
  • Groceries
  • Insurance (health, home, auto)
  • Car payments and transportation costs
  • Credit card or loan payments
  • Childcare or medical costs

Multiply that total by three to determine a three-month emergency fund goal, or by six for a more secure six-month fund.

2) Set Up Automatic Deposits
One of the easiest ways to save is to automate the process. Set up an automatic transfer from your paycheck or checking account into a separate savings account. This ensures consistency and removes the temptation to spend the money elsewhere.

3) Save Small Amounts Consistently
Even small contributions add up over time. Simple ways to save include:

  • Rounding up purchases and transferring the spare change into savings
  • Setting aside a percentage of each paycheck
  • Cutting back on non-essential expenses and redirecting that money to your emergency fund

4) Use Unexpected Money Wisely
If you receive a tax refund, work bonus, or other unexpected cash, consider saving a portion of it. Large lump sums can give your emergency fund a significant boost.

5) Keep Your Fund Separate and Untouched
It’s important to distinguish between emergency savings and other savings goals. While it may be tempting to dip into your fund for a vacation or new gadget, keep this money reserved strictly for true emergencies. If possible, open a separate account to prevent easy access.

Building an emergency fund takes time and discipline, but even small steps will help you create financial security. By consistently saving, automating deposits, and keeping your funds for true emergencies, you can protect yourself from unexpected financial stress and gain greater peace of mind.

What’s Ahead For Mortgage Rates This Week – April 14th, 2025

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Last week’s inflation reports, both the CPI and PPI, came in significantly cooler than expected. However, this must be viewed in the context of the administration’s recent tariff policies. Rather than signaling a healthy reduction in inflation, the data points to signs of deflation—which can be just as damaging to the economy as high inflation. While the FOMC Minutes offered little insight regarding interest rate changes, Federal Reserve Chairman Jerome Powell has made it clear that no action will be taken until more data becomes available. Finally, the latest consumer sentiment report dropped to its lowest level in three years, with inflation concerns reaching their highest point since 1981.

Consumer Price Index

Consumer prices fell in March for the first time since the outbreak of the coronavirus pandemic in 2020, but economists warn inflation could get worse if the U.S. retains higher tariffs on China and the rest of the world. The consumer-price index declined 0.1% last month, the Bureau of Labor Statistics said, aided by falling oil prices and lower airfares. It was the first drop since May 2020.

Producer Price Index

Cheaper oil has taken some pressure off on the inflation front, but it may only be temporary in the face of a major trade war between the U.S. and China. Wholesale prices in the U.S. fell 0.4% in March, dropping for the first time in 17 months, mimicking a similar report on consumer goods and services that showed retail-level inflation was muted last month.

Consumer Sentiment

The University of Michigan’s gauge of consumer sentiment fell to 50.8% in a preliminary April reading from 57.0% in the prior month.  It is the lowest level since June 2022. Sentiment has dropped for four straight months and is down 30% from December. Economists polled by the Wall Street Journal had expected an April reading of 54.6%.

Primary Mortgage Market Survey Index

• 15-Yr FRM rates saw no change from last week, with the current rate at 5.82%
• 30-Yr FRM rates saw a decrease of -0.02% for this week, with the current rate at 6.62%

MND Rate Index

• 30-Yr FHA rates saw an increase of 0.47% for this week. Current rates at 6.50%
• 30-Yr VA rates saw an increase of 0.47% for this week. Current rates at 6.52%

Jobless Claims

Initial Claims were reported to be 223,000 compared to the expected claims of 223,000. The prior week landed at 219,000.

What’s Ahead

Very light release week with low impact data in the form of Federal Reserve’s beige book, Consumer Sentiment, and Leading U.S. Economic Indicators.

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Edmond, OK 73013

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