I rarely hear positive feedback when I talk to people about Reverse Mortgages.
I’ve even heard Notaries, people that are normally fairly level headed, say they would prefer to see their clients in private mortgage financing instead of in a Reverse Mortgage.
Most of the negative things people think are based on myth and rumour. You may have heard some of them?
The Biggest Myth: You’ll lose your home when the mortgage balance overtakes the value.
Nope. In Canada, you’ll never be forced to sell or be foreclosed out, guaranteed.
The Second Biggest Myth: The rates and penalties are extreme.
Not so. Rates for most reverse mortgages fall in line with Schedule B lenders and are a little higher than regular banks but not much so. Early payout penalties are reasonable. An example from a reverse mortgage with a five year term through one lender: Payout in the first year, 5 months interest; in the second year, 4 months and the third year, 3 months.
Another Myth: You are locked in forever.
The truth; Reverse mortgages come in open and closed forms, with a wide variety of terms making them more flexible than a regular mortgage. You can even make payments on them if you like.
Some of the benefits you may not have thought about:
Monster Benefit #1: Increase your income without drawing down your investments.
Monster Benefit #2: Help your kids out with the down payment without needing to pay the funds back and without dipping into your investments.
Monster Benefit #3: Increase your cash flow and reduce your expenses at a time when your income is reducing.
A Reverse Mortgage is not the right fit for everyone but it might be right for you. Please give me a call anytime if you want to know more.
