Reverse Mortgage Options For Seniors
You’ve been made to feel that there are no choices by your banker who was supposed to help when you need to borrow money in your golden years. That feeling ends now.
Here are the basics of a Reverse Mortgage and what my clients ask me the most about so you will be seen as a respected and capable supporter of your family. I will go through them here.
What Is a Reverse Mortgage?
A reverse mortgage is a loan that allows you to get money from your home equity without having to sell your home.
You will not have to make any payments on a Reverse Mortgage until the loan is due. This typically happens when you pay back the loan through selling the home or the last owner dies.
In essence, you are rewarding yourself now for paying down your mortgage through your working years and not waiting until you can’t to enjoy your life anymore.
How Does a Reverse Mortgage Work?
- You will no longer have a traditional mortgage – With a Reverse Mortgage you are trading what you are familiar with for a loan of your equity up to 55% of your home’s worth.
- You will no longer have to make monthly payments – This is a unique feature of the Reverse Mortgage. The amount you have borrowed and the length of time you have borrowed it for will determine the eventual cost of the loan.
- The amount you borrow initially and over time will accumulate and the interest will compound – To keep this very simple, this loan gets more expensive the longer you have it. If you choose to not make any payments over the term then there will be interest on this as well.
Find out more about how Reverse Mortgages work.
Is A Reverse Mortgage A Good Idea?
We all know that just because a celebrity says something on TV that it isn’t always true. There are legitimate and concrete reasons why the Reverse Mortgage is a good idea for some folks.
Reasons like there will be no more payments and you get to stay in your home.
But we have to get past celebrity endorsements and look at why a Reverse Mortgage may be a bad idea for you and the legacy you want to be remembered for.
Reasons like the loan becomes more expensive over time and the interest rates can be higher than traditional mortgage loans.
I covered all the pros and cons of Reverse Mortgages so you don’t have to guess if this is a good idea or not.
Reverse Mortgage Calculator – How The Numbers Add Up
I have found the answer to most Ontario homeowner’s math questions lie in understanding the concepts that guide Reverse Mortgages.
Initial Lump Sum Calculation – You’ve decided to take a Reverse Mortgage and want the whole amount you borrow up front (less any existing mortgage).
Example: Your home is worth 600K and you are eligible to borrow 180K. Your interest rate is 4.24% and you are borrowing for 5 years. Over this time you will have accumulated $42,449 in interest and the loan owing will now be $222,449.
Additional Advances Calculation – You’ve decided to take a Reverse Mortgage however you only need some of the loan up front and want to take some as income over time.
Example: Your home is worth 600K and you are eligible to borrow 180K. Your interest rate is 4.39% and you are borrowing for 5 years. You take 100K up front and want the remaining 80K in monthly amounts. You will receive $1,333 monthly until the five years are over.
As you are taking part of the borrowed amount over time you have accumulated less interest. In this example $33,794 and your loan owing after 5 years will be $212,448.
What Are The Best Alternatives To A Reverse Mortgage?
Let’s take a moment and shield you from the ‘one size fits all solution’ message.
There are many good alternatives to the Reverse Mortgage to consider. From liquidating investments to taking a pre-paid interest Home Equity loan, there are plenty of options worthy of exploring.
I have found that gaining knowledge of the alternatives can help you become more resistant towards changes that may come in the future. And you can always take out a Reverse Mortgage further down the road.
Helping You In Ontario with Your Reverse Mortgage Options
I can help you anywhere in Ontario with your Reverse Mortgage options. My lender network can be used anywhere you are in Ontario. If you’re in the GTA or as far north as Huntsville/North Bay, I can meet with you in person.
If you’re further away, we can have a phone call and do everything we need to by email. Here is some information on meeting me in Brampton, Mississauga, Toronto, Barrie.
So what is at stake when it comes to listening to your banker or only considering a ‘one size fits all’ solution?
Spending your golden years worrying about high credit card debt?…Creditors forcing you out of your home?…Seeing your children not be able to get a home?
No, that’s not how your story ends. Now is the time to take back control of your finances and become the hero in the eyes of your Grandchildren. Contact me today and let’s get you the Reverse Mortgage you need. Your family’s gratitude is worth it!
