As we age in today’s economy, more and more Canadians are finding their primary concern isn’t asking themselves: are mortgage rates going up? Older folks aren’t even necessarily concerned with the historically low mortgage rates. The world being what it is today means many seniors are looking into the pros and cons of a reverse mortgage.
First things first as they say. These reverse mortgages are just like other types with a few very important differences in that they are only available to people 55 years and older. Of course there are some big things that are different.
- The location of your home and the house value does make a difference to the amount that you can get. In most instances, the maximum you can get is $750,000 and $20,000 is the minimum amount. These amounts can be narrowed down by getting a proper appraisal but there’s no need to worry about any out-of-pocket expenses initially. You don’t need to pay for any of these closing costs from a reverse mortgage at the time of funding.
- It’s also good to know that you don’t need to take all of the money you get preapproved for at once. Many people only require a small amount at first and that’s the amount you pay interest on. As you need more money when things come up in the future, you can take more from the initial amount that you are preapproved for.
- While you are living in your home, you will make no monthly mortgage payments.
Perhaps best of all is the fact that you keep the house in your name and the balance owing from any reverse mortgage are paid back at the time of sale. Like any other mortgage product, these reverse mortgages need to be handled with caution and prudence but they are a good idea for a growing number of older Canadians.