Reverse mortgages have been offered in Canada for many years now but myths and misconceptions have kept homeowners from taking advantage of the benefits available. It is important for homeowners to learn more about a reverse mortgage, what it is and how it can be used, to make an informed decision in the senior years.
What is Reverse Mortgage?
To begin, you must learn what a reverse mortgage is. A reverse mortgage is a loan available to homeowners who are 55 years of age or older. The amount available for borrowing is based on factors such as the value of the home as well as age. The difference between a reverse mortgage and a traditional home loan is that payments are not to be made on a reverse mortgage until you decide to sell your home or move. You do have the option to make payments if you so choose but there may be prepayment charges in place, so it is essential you discuss any prepayments with your broker. If you decide to move or sell your home, the loan will be repaid from the proceeds that are earned from the sale of the home. Any money that is left over will belong to your or the estate after securing a reverse mortgage in Cookstown.
Because a reverse mortgage is different from a traditional loan, homeowners tend to have misconceptions about what takes place. By learning more about the option, you can make an informed decision as to if the loan type will be beneficial to you in the long run. For many seniors, the loan is used as a form of retirement or to make changes to the home for a more comfortable living space.
Misconception #1 I Will Be Forced to Sell My Home and Repay the Loan
Many homeowners feel that a reverse mortgage means at some point they will be forced to sell the home and repay the loan. This is not true. As the homeowner, you maintain ownership and control at all times. All that is required of you is to provide good property maintenance as well as pay property taxes and insurance.
Misconception#2 Poor Credit Means I Do Not Qualify
You do not have to have good credit to qualify for a reverse mortgage loan in Burlington. Lenders offer ways for you to have access to this loan type no matter your credit rating.
Misconception #3 Reverse Mortgage Fees and Closing Costs in Canada are High
Again, this is not true. Fees and closing costs are the same as if you were taking on a traditional mortgage loan. You will have an appraisal fee, conveyance, closing and administrative costs, are all included in the loan to help with out of pocket expenses. Your lender will be able to assist you with learning what, if anything you will owe up front.
Misconception #4 I Will Owe More than My Home Is Worth
With a reverse mortgage, you will never owe more than what your home is worth. The total amount you owe will never surpass the fair market value of your home during the time of sale.
To learn more about reverse mortgages, contact our office at Mortgage Guys today. We are more than happy to consult with you about reverse mortgages and help you determine if this is an option that will be of benefit to you and your family.