Reverse mortgage myth debunked?

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Still, many brokers are wary.

“I can understand why many homeowners would be attracted to this type of finance as it’s a fixed rate compared to a HELOC, and it’s a way of getting cash quickly if you are going through a financial patch, but it’s not ideal, especially if you want to sell in the future,” Marc Abramovitz from Northwood Mortgage and founder of ilovemymortgage.ca said in early April. “There are a lot of other options available and homeowners really need to do a lot of due diligence and get independent advice before signing up for (reverse mortgages).”

And while reverse mortgages have been available since the introduction of the Canadian Home Income Plan in the mid-1980s, very few financial lenders have openly offered the product. However, with an aging population and dependent children needing help with down payments, there has been a report of rising interest in this financial method.

“I am seeing a lot more use and interest in reverse mortgages, especially for those who are in difficult situations,” Abramovitz said. “For example, one my clients had no mortgage on her home, and needed cash to reinvest back in her house. Her only other was to sell the property so a reverse mortgage was the best solution.”
 

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  • Brian Lambert on 2014-05-27 11:28:32 AM

    I have not seen a reverse mortgage yet that I like. I have many seniors who I see and a lot are referred to me by their adult children. They need debt relief in almost all cases to be able to stay in their homes. Even today with low rates a client can get a $100K mtg at 3.19% or lower with a 30 yr Amm that is only $483.00 mth or $264 a mth interest only. Seniors want to protect their equity and the appreciation that home will bring in the future. They want to sell and down side when they are ready to do so, or may need the cash for a long term care facility. What ever, seniors are wanting to stay in their homes longer and are in better health today to enjoy retirement.

  • Angela Wong-Liao - Invis Inc on 2014-05-27 2:47:56 PM

    Reverse mortgage is not for everybody, it is really depending on each case scenario. I believe that reverse mortgage is a good product for seniors who want to stay in their homes, lots of equity but cash poor. They cannot have a decent standard of living just relying on their pension, CPP & OAS, reverse mortgage can offer an alternative for this group of seniors. The Homequity Income Advantage Program can be a good alternative as their maximum limit is 50% of equity of the house. If the house is free and clear, the senior is over 65, not sufficient income nor good credit rating to qualify for regular mortgage, reverse mortgage from Homequity Bank can solve this group of senior's cash flow challenge and still have 50% of the equity left for their families.

  • Keith on 2014-05-28 12:05:44 PM

    Angela has it right.

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