(The truth regarding the most hated product out there!)
What is a Reverse Mortgage?
Well it is a loan secured against your home similar to a regular mortgage or credit line security. However the maximum amount you can receive as a loan is 55% of your home’s value
How do I know how much I can get?
Ask me! The calculation is based on your age and the type of home you are in (Single family dwelling, townhome, condo, etc)
What if I can’t afford my payments?
No problem there are no payments, the propose of this product is to improve your cash flow and maintain the ownership of your home. The payments are ballooned within the program itself and paid out once your home is sold
In what forms can I get my money?
There are 2 options:
- Lump Sum up front or
- A small lump sum up front (minimum $20,000) and then a minimum payout of $12,000/Annually (Can be taken as a monthly, quarterly, semi annually or annually)
What are the fees associated to set up this mortgage?
There are 3 sets of fees:
- ILA or Independent legal advice
- Set up of the loan, if you are taking the lump sum ie: one payment the fee is $1795 if you are taking the income facility the fee is $2495
Are there penalties to get out of my reverse mortgage?
This product is meant for the long term so usually there is no penalty associated with breaking your Reverse Mortgage, however if you do need to break within the first 5 years here are the penalties associated.
- 5%-Year 1
- 4%-Year 2
- 3%-Year 3
- 3 Months Interest-Years 4/5
- No Penalty after year 5
Let’s tackle a few Myth’s vs. Facts
Myth #1: The bank will own my home?
Fact: The title of your home remains in your name! There will be a charge on title like any other mortgage product
Myth #2: The unpaid interest will erode my equity
Fact: 99% of homeowers have money left over when their Reverse mortgage is paid back. In fact on average there is more than 50% of the value of their home remaining
Myth #3: The bank can sell or foreclose on my property at anytime
Fact: As long as the property taxes and home insurance are in good standing and the homeowner is living in the home, the loan will not be recalled
Myth #4: If I pass away my surviving spouse will need to pay off the loan
Fact: They have the option to stay in the home without reapplying for the loan everything remains the same
Is the Reverse mortgage for everyone out there? No but neither is every other mortgage product. If this product works for you and your families situation then it’s the right product. Let’s sit down go through everything to see if this a fit for you!
“I’m a great believer in Luck, and I find the harder I work, the more I have of it”