What
Is a Reverse Mortgage, Anyway?
(And
How Does it Work?)
What
are some of things you dream about doing? Well - what’s
holding you back?
If
you’re like most folks the simple answer is: Money. Or
lack thereof.
Yes
I know there are other things that hold people back from fulfilling
their dreams but money tops the list time and time again!
Well if you’re over 55 then I’ve got great news
for you, a reverse mortgage may be just the ticket for you.
A reverse mortgage will allow you to unlock the equity in
your home and let it start turning your dreams into reality!
The
key difference between a traditional mortgage and a reverse
mortgage is that instead of you making regular payments
to someone else, the mortgage now pays you. Neither you
nor your spouse ever makes any payments – principal or
interest - for as long as you or your spouse lives in your
home. Reverse mortgages are not a "new" phenomenon
- they have been around for some time now and are both practiced
and popular in a variety of countries. With a reverse mortgage
your existing equity is the security that backs it.
This
mortgage is exclusively available to homeowners that are 55
and over, this applies to both you and your spouse. Typically
you can receive up to 40% of the value of your home. Of
course the specific dollar amount you receive will depend
on your age and that of your spouse, the type of home and
it’s location, the appraised value of your home and any
and all existing charges and or debts against it.
A
reverse mortgage also offers you flexibility when it comes
to how you would like to receive your money. You can opt to
take it all in one lump sum draw, or you can take some now
and more later, or you can even receive planned draws over
a set period of time. Some folks choose to combine a lump
sum draw at the beginning with ongoing draws over time. As
stated previously no payments are required while you or your
spouse are still living in your home. The only time you will
ever be required to repay the reverse mortgage in full is
when your home is sold, or if you move out.
Another
major benefit of a reverse mortgage is that you receive the
money tax-free. These funds are not added to your taxable
income so it doesn't affect such things like Old Age Security
(OAS) or Guaranteed Income Supplement (GIS) government benefits
you may be currently receiving or will be receiving from the
government.
What
you do with the money is up to you. There may be some
long overdue renovations you would like to perform or a vacation
that you’ve wanted to go on for quite some time that
you can now finally take. Or you may simply want to have the
peace of mind of knowing that you have some savings set aside
in case of a rainy day! The only real caveat that a reverse
mortgage comes with is that any outstanding loans secured
by your home must be paid out from the proceeds of the reverse
mortgage. Of course any and all monies beyond that are yours
to keep as stated before.
With
a reverse mortgage, ownership and control of your home always
remains with you. Most importantly no one will ever ask
you to move or sell your home in order to repay your reverse
mortgage. All that's asked of you is that you maintain your
property and stay up-to-date and current with any and all
property taxes, fire insurance and condominium or maintenance
fees while you call it home.
All
the remaining equity in your home stays yours! If you were
to look at the stats, you would discover that almost all homeowners
who chose a reverse mortgage still have money left over when
their reverse mortgage is repaid. And on average, the amount
left over is approximately 50% of the value of the home when
it is sold, that’s tremendous peace of mind.
If
your home is part of your estate, be rest assured that your
estate is well protected. With reverse mortgages you are
guaranteed that the amount to be repaid back will never exceed
the fair market value of your home at the time it’s sold.
If your heirs decide to keep the home, all they need to do
is repay the reverse mortgage back in full. This can be done
with other funds or through a new mortgage on the same property.
Another
benefit of a reverse mortgage is that it can also help you
save on taxes. If and when you decide to use the money you
receive to buy non-registered investments such as GICs and
mutual funds, you may be able to deduct the reverse mortgage
interest charges from the income those investments earn. If
this facet of a reverse mortgage is of particular interest
to you, it’s imperative that you consult a financial
or tax advisor to discuss your specific situation.
There
you have it - the “Coles Notes” version of reverse
mortgages.
If
this sounds like something that may work for you or your would
simply like more information or discuss it further please
fill out our quick inquiry request form at the top of the
page.
In
fact - if you'd like to speak to a reverse mortgage professional
who can provide you with answers and information so as to
assist you in making a decisions that's best for you, why
not call us right now?
It's
toll-free, and we'd be delighted to hear from you!
Call
Right Now:
1-877-686-4246
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