Reverse Mortgage Brief Introduction
Wednesday Aug 04th, 2021
A lot of people have been talking about Reverse Mortgage. In general, they have a lot of Misconception about the product.
The most common questions in their mind are “Are reverse mortgages too expensive because the rates are high?” or “Do I need to pay the mortgage payment for reverse mortgage?”.
I want to make very clear that I am not selling the Reverse Mortgage here. I just want to give the homeowners like you one more option to control you life financially. At the same time, you can help yourself and your family members to have a better life.
After all you spent your lifetime to pay your home, why don’t you let your home pay you now.
- If you look at the Statistics, 45% of Homeowners are over the age of 55
- There are 6.8 Million Canadians over the age of 65.
- 66% of Canadians carry debt into retirement and 21% are credit challenged.
- Average 65 plus retiree is carrying $200K investments into
retirement and 50% believe they will run out of money in 10 years.
- Only 55% have a Financial Planner.
- Canadians aged 65 will have a 50% chance of living to 92.5-year-old.
As you know it is not uncommon that buying a home with the price you can afford is very challenging especially when you don’t have enough down payment. Parents can use the equity of their home with a lump-sum towards a down payment for their children.
You can buy a vacation home without any additional payments when you can use fixed or limited income from the reverse mortgage to pay the mortgage of the vacation home.
If you want to purchase a home you love, you may worry about the traditional loan when your income is not qualified to pay the mortgage. Having the Reverse Mortgage plus the proceeds from existing home can pay the mortgage payment.
You also can have a short-term lending solution which allows you to access equity from your home to pay for the renovations which can increase the value when you are selling your home.
With the reverse mortgage you can buy investment property and generate income as well.
Now, you may ask me how to pay back the reverse mortgage. Nothing is Free. You are correct.
One of the benefits of Reverse Mortgage is that No payments are required as long as one applicant lives in the home and uses the home as the primary residence.
When one of the spouses needs to move to nursing home, the other person would stay at the home, there is no issue at all.
When you apply for the Reverse Mortgage, you don’t need to have the Stress Test, no Credit Check, No Income Requirement and No Medical Check.
In fact, you can unlock up to 55% of your home value into cash depending on your age and the property.
The older you are, the more access to equity you can have.
After you are approved with the Reverse Mortgage, you don’t need to take all amount once. You can take it monthly as cash flow or just take monthly as you need it. Interest will be accrued on what has been advanced.
Your borrowing is tax-free while the value of your home is still growing everyday.
If the homeowner passed away, there was no penalty at death. Your estates decide if they want to sell the home to pay off the mortgage or pass to the family members who inherit it and change the title. They need to be qualified for a mortgage by the way.
There are eight common questions the homeowners usually asked.
Q1. Will be the bank own the home?
Q2. Can the bank force the homeowner to sell or foreclose at any time?
Q3. With a reverse mortgage will the homeowner owe more than their house in
Q4. Are reverse mortgages too expensive because the rates are high?
Q5. Isn’t a reverse mortgage a last resort solution?
Q6. Can the homeowner(s) still get a reverse mortgage if they have an existing mortgage?
Q7. Isn’t a Home Equity Line of Credit (HELOC) a better option?
Q8. Aren’t surviving spouses stuck with paying the loan after the homeowner passes away?
If you want to know the answers, I am glad to explain to you when you call at 416-399-9981.