10 Facts That Will Make You Change Your Mind on Reverse Mortgages
There’s a lack of information around reverse mortgages, and as more seniors look to this type of financing to help their adult children as well as finance their retirement – it’s time to set the record straight on some misconceptions.
Here are the ‘Top 10 Facts That Will Make You Change Your Mind on Reverse Mortgages':
1) Once you are approved for a reverse mortgage, you are approved for life.
2) You can qualify for a reverse mortgage regardless of your credit rating or income level.
3) You will still have equity left in your home. Even after arranging a reverse mortgage, in most cases, clients have an average of 50% of the equity left in their homes.
4) You can’t sign final documents without first receiving Independent Legal Advice. That means all Canadian seniors must receive independent counsel before a reverse mortgage can be arranged.
5) Arranging a reverse mortgage is not complicated. Some seniors have described arranging a reverse mortgage as ‘the simplest financial transaction ever arranged.’
6) Reverse mortgage rates are as low as Prime plus 1.25%
7) Money is of course tax free, and can help you lower your overall tax liability.
8) If one spouse dies, there are no changes to the terms of the reverse mortgage. The loan does not have to be repaid and you don’t have to re-qualify.
9) Reverse mortgages provide you with an opportunity to diversify your retirement portfolio.
10) We have different rules in Canada when it comes to reverse mortgages, so don’t look to U.S. sources for information.
“More Canadian seniors are looking to a reverse mortgage as a way to supplement their retirement income. For many, it helps them to remain in their homes as they age,” explains VP National Sales, Jeff Spencer.
“When it comes to finances, we want to educate Canadians on their options, and clear up misconceptions around the reverse mortgage,” he adds.
In addition to the top 10 Facts above:
For homeowners age 55 or older who want to access the value in their home, a reverse mortgage offers a number of benefits:
Cash-flow freedom. Clients may use the money any way they wish. You can use the funds to invest, renovate your home, retire, travel, buy a cottage or vacation home, to gift an early inheritance to your children, or simply to improve your lifestyle. The possibilities are endless. And no payments (interest or principal) are required until the home is sold or both homeowners move out. This frees up monthly cash flow and allows you to live more comfortably.
Easy qualification. No medical, income or credit qualifications are required.
Ownership protection. Title remains in the homeowners’ names and they will never be asked to move or sell to repay their mortgage.
Estate protection. The amount to be repaid is guaranteed not to exceed the fair market value of the home at the time it is sold, protecting the homeowners and their the estate. In our experience, more than 99% of homeowners have equity remaining after repayment.
Purchases & Refinances. The reverse mortgage product is available for both refinances and home purchases.
Borrowing Power. Homeowners 55+ can access up to 55% of the current appraised value of their principal residence. The exact amount available will depend on the age of the homeowner and his or her spouse as well as the location and type of home.
Tax-Free Funds. The funds are tax-free and there are no restrictions on how they can be used – with the exception that any outstanding loans secured by the home must be paid off.
Flexibility. You can choose to take a lump sum or to receive the funds over time. No regular repayments are required; the loan does not become due until the home is sold or both homeowners move out.
Contact Jenna for more information and to apply for a reverse mortgage.
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