“Over the last several years, we have used reverse mortgages as a tool to help parents provide down payments for their grown children. This year in particular, following the tightening of qualifying rules, reverse mortgages have become an invaluable tool for many young families.
In the past, parents would have to remortgage their homes and take on large monthly payments; however, as reverse mortgages became more popular and well known, those same parents realized they could use it as a tool to help out without taking on the financial burden of payments while growing the overall net worth of the family.”
“Millennial buyers are faced with the struggle of saving a down payment while grappling with the added stress of tougher mortgage rules. Parents always want to help; however, reverse mortgages create debt in order to create more debt, which doesn’t add up. Worst-case scenario, the parents’ equity can be eroded via the potential fees, interest and so on that come with reverse mortgages.
Perhaps an incentive similar to the first-time homebuyers’ rebate for the land-transfer tax could be put in place to stimulate and encourage homeownership without a parent having to put a lifetime of savings at risk.”
“Reverse mortgages are an important offering in our industry. They can come in handy for the paid-off homeowner for ongoing expenses that come with aging, such as live-in caregivers, nursing home costs or renovations to make the home more accessible. Reverse mortgages allow clients to stay in their homes.
Given rising real estate prices, millennials might seek assistance for their down payment. A reverse mortgage can provide a viable way for parents to provide an early inheritance. It’s always recommended to have independent legal advice, and it’s important to balance long-term and short-term goals.”