Is A Reverse Mortgage A Good Idea?
The answer to this question could impact the future of your legacy. You want to be remembered as the Grandparent who was good, kind, and loving. You also want to be remembered as the Grandparent who made a smart decision regarding the Reverse Mortgage. Here’s what you need to know.
Celebrity Reverse Mortgage Commercial
We all know that just because a celebrity says something on TV that it isn’t always true. In fact, often the reason you need a celebrity actor to endorse your product is because you need the trust of the celebrity to convince your audience of your product’s worth.
The solution to cut through the flattery is to get down to the facts. Would you still be interested in the Reverse Mortgage if it had to stand on its own?
The Pros Of Reverse Mortgages
There are legitimate and concrete reasons why the Reverse Mortgage is a good idea for some folks.
- No more payments – this is typically the best feature of the Reverse Mortgage. At a time in life where your income is lower than your working years, you will enjoy the relief that comes from not having to make a monthly payment.
- No taxes paid on the loan – the amount you borrow and the additional equity you get on a monthly basis (if you choose to do this) is not taxable. *Please confirm this with your tax advisor.
- Will not affect other government income – if you are receiving or will be applying for your entitlements like Old Age Security, you will not receive less because of a Reverse Mortgage.
- You stay in your home – the alternatives for many Ontarians are not ideal. A Reverse Mortgage allows those without other options to stay in your home and not have to sell.
The Cons Of Reverse Mortgages
Now to ensure this is a good idea, 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.
- Loan becomes more expensive over time – this is the first and biggest reason people are concerned about the Reverse Mortgage. If you decide to not make any payments, then the interest on the loan grows and you pay interest on that interest.
- Potentially less money left for your heirs – as the loan grows over time, the remaining equity in your home reduces. This may be offset by how much your home appreciates over time.
- Time required to settle your estate – Reverse Mortgage lenders have terms and conditions as part of the loan. One potential issue is the time given to repay the loan and the amount of time your heirs need may not line up. This could cause your family to have to sell the property rather than keep it.
- Interest rates can be higher – because the lender is not getting paid until the property sells, they feel this dictates a higher interest rate for borrowing.
Learn more about all the things you need to know about Reverse Mortgages.
Become Famous With Your Loved Ones
We can listen to the celebrities and risk being remembered by our loved ones for the wrong reason. Or maybe, you can become famous in the eyes of your Grandchildren.
Find a Mortgage Agent that focuses on educating people about Reverse Mortgages and doesn’t use aggressive sales tactics. My clients enjoy a listening ear that wants to help you learn what is best for you. How you want to be remembered.
My hope is that through making the best decision for your legacy, your Grandkids will want to see you even more. And you will be remembered as the one who took action and contacted me today.