Is A Reverse Mortgage Right For Me?
Do you have plans for home renovations but don’t have the funds? Are you trying to help your children pay their down payment with the equity tied up in your home? Perhaps, you are above the age of fifty-five and in need of money to pay the bills, medical expenses, and just want to live comfortably? If you said yes to any of these questions, a reverse mortgage might be just what you need! However, if you are unaware of this financial option, you may not know how it may help you. To take you through the features, benefits, and other aspects of reverse mortgages, mortgage agent Gary Corriveau has shared some pointers so that you are better equipped to make a suitable decision.
What is a reverse mortgage?
A reverse mortgage helps you by accessing the equity in your home. Unlike a traditional mortgage in which you make regular payments to someone else, a reverse mortgage pays you. The big advantage of a reverse mortgage is that you do not have to make any regular mortgage payments for as long as you or your spouse live in your home. That’s what has made reverse mortgages such a popular solution in Canada, the U.S., the U.K., Australia, and other countries.
What is the purpose of a reverse mortgage?
A reverse mortgage is designed exclusively for homeowners aged fifty-five and older. This age qualification applies to both you and your spouse. You can receive up to 55% of the value of your home through a reverse mortgage. The amount receivable is based on your age and that of your spouse, the location and type of home you have, and your home’s current appraised value. You can choose how you want to receive the money. A reverse mortgage has a lot of flexibility as it gives you the option of receiving all the money you are eligible for in one lump sum, or you can take some now and more later, or you can receive planned advances over a set period of time. A reverse mortgage allows you, the homeowner, to retain title and maintain ownership and control of your home just like any other mortgage. The lender simply has a first mortgage on the title.
A reverse mortgage is a lifetime product. If your property taxes and insurance are in good standing, the property remains in good condition, and you are living in the home, then the loan will not be called even if the house decreases in value. If you have an existing mortgage, the first step we will take is to pay off your conventional mortgage along with any other secured debt, and the remainder of the funds can be used however the way you choose. Many clients use a reverse mortgage to pay off their existing mortgage and debts. A reverse mortgage can be used to consolidate existing debt, eliminate monthly debt payments, and provide financial security.
A reverse mortgage frees up equity that is tied up in your home and can allow you to enjoy your retirement on your own terms. In fact, many financial professionals recommend a reverse mortgage as the proceeds are tax-free and after paying off debts, can be used for anything you want. For example, you can purchase a vacation home or help your grandchildren with school tuition. A reverse mortgage can also be used to supplement monthly income instead of selling and downsizing or taking out a conventional mortgage or a line of credit.
There are additional benefits to taking a reverse mortgage. The money you receive is tax-free. It is not added to your taxable income, so it doesn’t affect Old Age Security (OAS) or Guaranteed Income Supplement (GIS) government benefits you may receive. You can also use the money in any way you please. Maybe you want to enjoy your retirement or cover unexpected expenses. Perhaps you want to update your home or help your family without depleting your current savings.
Questions to ask your mortgage agent
1. What are the challenges faced when securing a reverse mortgage?
Your property must have an appraised value of at least $200,000 for you to be eligible for a reverse mortgage. The appraised value of your home is only one element in determining whether you are eligible and how much you qualify for. The other important factors are your age, the age of your spouse, and the location of your home.
2. What costs are involved in getting a reverse mortgage?
There are one-time fees to arrange a reverse mortgage, such as an appraisal fee, fee for independent legal advice, as well as title insurance, registration, and an administration fee. With the exception of the appraisal fee, these fees are paid for with the funding dollars.
3. Are there any alternatives to a reverse mortgage?
You should always explore all of your options before making a decision. Home Equity Lines of Credit (HELOC) are a good short-term borrowing option if you can pay the interest and loan back in the future. In comparison, a reverse mortgage is a long-term financial solution that does not require any monthly payments and provides the ability to prolong retirement savings.
Also, reverse mortgage rates can be more favorable than alternative lenders’ rates on second mortgages or unsecured loans. In addition, with a reverse mortgage, you do not have to worry about making any repayments as the debt is not owed until you, the borrower(s), die or no longer live in the home.
If you are looking for a mortgage agent located in London and Windsor, Ontario, then reach out to me at MortgageswithGary.com. I have significant years of professional experience in the financial services industry, working with clients to help families achieve the dream of homeownership and financial independence. Also, I have a reputation for building strong relationships centering on integrity, transparency, and delivering client service excellence. Reverse mortgages are available in all of the Canadian provinces. Contact me today if you have any questions or if you would like to see how much you can qualify for with a reverse mortgage! To learn more about the services I offer, please click here.