Reverse mortgage pros and cons depend on your level of understanding.
As a Mortgage Broker, when expressing an opinion, I always tell my clients to check with proper resources before making a decision. Would you ask your lawyer to put a new filling in your teeth?
Over the years I have been told by clients that their friend, neighbour, or work associate has given them advise on mortgages that is so far from reality it is unfortunate. And the real problem is they sell themselves as knowledgeable in a field that they apparently know little or nothing about.
This is widely the case when I talk to clients about Reverse Mortgages.
I Recently visited a long time, knowledgeable friend and over the course of our visit the topic of Reverse Mortgages in Canada came up. He immediately got his back up and said this was a scam, a fraud and deceitful. I asked him why he felt that way and here were some of his comments:
- No one should borrow against their home and lose equity for any reason.
- If people did not plan for retirement, they should not jeopardize their estate by taking such a mortgage.
- Interest rates are higher so why should they take a Reverse Mortgage.
- Their home can be foreclosed on if the value goes down and the mortgage goes up.
- Why not just defer property taxes and stay in the home, as if that would save all people.
- Anyone at retirement age should have no money problems.
It was obvious that in his lifetime he made no financial mistakes and life always seemed to deal him a good hand. He also had only one child to support and statistically, that is about $250,000. until they leave home and if you had 4 children he just saved the better part of $750,000.
As we spoke it was apparent that his research may have been founded on Reverse Mortgages In the USA where many programs are “Ready – Shoot – Aim” as his information seemed to have holes in it. Remember, if you think you are correct you can find a source that agrees with you BUT that source may also be an Expert in an area they know nothing about.
Knowledge is Power! That is the main reason I offer the e-book “Home Run- The Reverse Mortgage Advantage” as it outlines in detail the facts and fiction about Reverse Mortgages In Canada. You can also watch this video on “What exactly is a reverse mortgage” to learn the basics of reverse mortgage.
Here are some facts about how a Reverse Mortgage in Canada works:
- Ownership stays in the client’s name and they own the home.
- One of the most persistent misconceptions is that people still think they can lose money by using a reverse mortgage but that is not a fact.
- To be eligible for a Reverse Mortgage all parties on title must be 55 or older.
- You do not make monthly payments and are not required to pay a cent until the home is sold, as long as you deal with property taxes annually, maintain fire insurance, and maintain the property.
- Your home does not have to be Free and Clear to obtain a Reverse Mortgage In Canada but the equity must be such that if a mortgage is on title it is paid off, first and then you get the remaining cash. A Reverse Mortgage must be in first position.
- Home Equity’s conservative lending approach means that 99% of their clients have equity remaining in their home after it is sold.
- You can use the Reverse Mortgage to cover any costs you wish. Many clients use the money for home renovations, travel, gifts to their family (a Living Inheritance) and more.
- The Reverse Mortgage does not impact on Government benefits such as Old Age Pension, Canada Pension Plan or the Government Income Supplement.