A good time to get a reverse mortgage is when you are about to retire or retired already. You must be 55 years or older and own a home that has some equity and is your principal residence. At the same time you might be cash strapped at the end of each month or simply want more money to other things of your choice.
What Is Your Current Understanding Of A Reverse Mortgage?
Here we address the question – “when is a good time to get a reverse mortgage?”
Are you retiring or retired and wondering when is the best time to get a reverse mortgage?
- a good time is before or after you retire,
- when your home has equity enough to sustain you,
- when you need some money to improve your cashflow or want a lump sum of money.
When Is It A Good Time To Get A Reverse Mortgage?
The Question is “when is it a good time to get a reverse mortgage?” If you are asking yourself this question you are probably already aware of the benefits of a reverse mortgage. And you may be looking for financing solutions for yourself or how you can ease the financial strain for a family member.Let’s discuss, first of all, the qualification of obtaining a reverse mortgage and then will review the benefits of a reverse mortgage and when is a good time to get one.
Click here to learn more from our Living Your Best Retirement With A Reverse Mortgage Webinar.
Why Would You Be Turned Down For A Reverse Mortgage Or How To Qualify
You must own your own home with equity to begin the application for reverse mortgage. You also must be 55 years of age at the time of application. It’s OK if you own your own home whether it be a single family home a condo or a townhome and/or you have a current mortgage on that property. You must payout that mortgage or a line of credit with your reverse mortgage as a reverse mortgage must be in first position registered with land titles.
What Percentage Of Equity Can You Get On A Reverse Mortgage
A reverse mortgage will give you up to 55% of the value of your property minus any registered encumbrances; such as a mortgage or a line of credit. Once we have the value of your home and subtract the current mortgage or line of credit a percentage of the remaining equity can be put into a reverse mortgage.
There are other variables determining the amount of equity you can access, your marital status, your age, property location are a few that are taken into consideration.
We know today retiring seniors are retiring with more debt than ever before. We also know living expenses have increased, medications and health care aids have increased, home values have increased, and our life expectancy has increased. But pension income has not increased. There is a reason why reverse mortgages are increasing by 28% annually across Canada and we have just noted why.
What Is The Best Age To Get A Reverse Mortgage?
Our reverse mortgage clients have a few things in common; they are at least 55 years of age they own their own home with equity and they’re looking for a financing solution. Perhaps when you retired you thought you had enough money to finance your retirement. Even though we think we’ve planned the best we could, life events happen and we may find ourselves unable to cover these events financially.
How Much Does Your House Have To Be Worth To Get A Reverse Mortgage?
If you are finding that you don’t have enough money at the end of the month to pay your bills but you have equity in your home this may be a good time to inquire about a reverse mortgage. Imagine living your retirement without financial stress and the ability to pay your bills, keep your fridge stocked and have a slush fund in your account every month to do something you enjoy, without having to make a mortgage payment or an interest payment on these funds.
We have some clients that were so strapped for cash at the end of the month they were buying non-perishable goods from the dollar store. Until they inquired about a reverse mortgage to take away their financial problems. If you have a mortgage currently, imagine how much easier it would be to manage your monthly finances if you could say goodbye to that mortgage payment. 99% of seniors in Canada would prefer to age in place, meaning they would rather continue to live in their home for as long as possible.
Is Reverse Mortgage Really Worth It?
Some clients need assistance with their daily living. They don’t want to burden family members with this, so they have taken out a reverse mortgage to pay for home care to come in and provide the necessary care, and family continue to visit and enjoy their company without having to take care of their daily needs.
Remodeling your home to assist with mobility issues can also be done with a reverse mortgage. Or maybe you simply want to update your home and give it a fresh new look. You have heard the term asset rich and cash poor; a reverse mortgage provides the tool to access the equity in your home to ease your cash flow. What you do with your equity is entirely up to you. After all, you are spending your own money, you should be able to decide how to spend it.
Some of our clients are asset rich and don’t have a cash flow problem, but they would like to access some of their home equity to maybe help a family member buy a home, or possibly help grandchildren with education costs. Or maybe even invest their equity into long-term investments, and they can write off the interest of the investment they have taken out.
If you have an investment portfolio currently and you also would like some cash, withdrawing from your investments has its consequences as far as taxable income. Opting for a reverse mortgage to access cash is a good financial decision that even your financial advisor would agree with.
With the price of homes nowadays it is becoming more difficult for first time homebuyers to buy a home with limited savings. The gift of an early inheritance to a family member is a legacy that will allow them to begin their own journey of wealth through real estate.
And education costs are also on the rise making it very difficult for people wanting an advanced university degree to do so. Providing funds for your grandchildren so they can continue their education is also a popular reason for choosing a reverse mortgage.
You are now probably realizing there are various reasons why a senior would opt for a reverse mortgage. Keeping in mind there are no monthly principle and interest payments. Maybe you see yourself in one of these scenarios, or it might be something else. We have seen every situation. And whatever your reasons are for wanting to access your equity in your home the money can be used for whatever you choose.
If your interest has been piqued, I encourage to book a FREE – no obligation consultation call with me, or you can join the webinar Reverse Mortgages Living Your Best Retirement. And you might ask yourself when is a good time for my home to start paying me back?
Click here to learn more from our Living Your Best Retirement With A Reverse Mortgage Webinar.