Understanding Reverse Mortgages
Retire in your own home with less stress knowing you don’t have a mortgage payment to make. In fact, instead of paying a mortgage payment, Reverse Mortgages pay you!! Canadians are realizing the dream of being “mortgage free” at retirement might not happen for everyone. Rising interest rates, prices of homes, cost of groceries etc., you name it, the price has gone up. A reverse mortgage can be used to supplement your lifestyle by paying off debt, increasing cashflow, renovating your home, cover medical expenses, take a vacation and more.
The borrower has options how they would like to receive the funds. A one lumpsum payment, regular advances, or a combination of the two. The lender will lend up to 55% of the appraised value of your home. Your entitlement depends on location, age, and property style. The funds you receive are tax free and do not have to be repaid until you sell your home, move out of your home, or pass away. Most reverse mortgage lenders require to be registered as a first mortgage on title. Meaning they will payout your existing mortgage if you have one. The existing mortgage must be added into the new mortgage balance. At the time of arranging a reverse mortgage, the lender will require property taxes to be paid and up to date; however, the borrow can start to defer property taxes again after the new mortgage has closed. The borrow will be required to pay for an appraisal and legal fees.
Reverse mortgages are a great tool to increase a senior’s quality of life in their retirement years!
Contact your mortgage broker if you are curious about his product.