Reverse Mortgage Myths
Let’s separate the Myths from the Facts.
Myth #1
The bank owns the home
The Facts:
The homeowner always maintains title ownership and control of their home and they have the freedom to decide when and if they would like to move or sell.
Myth #2
Reverse Mortgage rates are too expensive because the rates are high
The Facts:
Reverse Mortgage rates are modestly higher than regular mortgages because there are no payments required.
Myth #3
A Reverse Mortgage is a solution of last resort
The Facts:
Many financial professionals recommend a Reverse Mortgage because it’s a great way to provide financial flexibility. Since it’s tax free money, it allows retirement savings to last longer.
Myth #4
A Home Equity Line of Credit (HELOC) is a better option
The Facts:
HELOCs are a good short term borrowing option for people who can pay the interest and loan in the near future. However, HELOCs are callable loans with monthly payments and there exists a significant risk of non-renewal or cancellation.
In comparison, a Reverse Mortgage is a long term financial solution that won’t be called based on economic changes such as interest rates increasing, property values decreasing, or a change in the homeowner’s income. Also, money from a Reverse Mortgage provides the ability to prolong retirement savings.
Myth #5
Those with a Reverse Mortgage will owe more than their house is worth
The Facts:
A Reverse Mortgage is approved based on conservative lending practices and will only allow clients to take a maximum of 55% of the home’s appraised value. In fact, 99% of Reverse Mortgage holders have equity remaining in the home when the loan is repaid. The average client still has 50% of their equity when they sell.
Myth #6
The bank can force the homeowner to sell or foreclose at any time
The Facts:
A Reverse Mortgage is a lifetime product and as long as property taxes and insurance are in good standing, the property remains in good condition and the homeowner is living in the home, the loan won’t be called even if the house decreases in value Reverse Mortgages provide peace of mind that the homeowner can stay in their home as long as they’d like.
Myth #7
The homeowner cannot get a Reverse Mortgage if they have an existing mortgage
The Facts:
For clients that have an existing mortgage, the first step we will take is to pay off your conventional mortgage along with any other secured debt.
Myth #8
Surviving spouses are stuck paying the loan after the homeowner passes away
The Facts:
Surviving spouses can choose to remain in the home without having to make a payment unless they choose to sell the home.
HomEquity Bank and Equitable Bank are the only two providers of the CHIP Reverse Mortgage, they are both federally regulated Schedule 1 Canadian Banks and both provide reverse mortgages in Canada for homeowners 55 and over. They are dedicated to exclusively servicing seniors and providing seniors with a mortgage solution that is flexible, and affordable.
