Are you considering getting a reverse mortgage? Many people consider this option to access their home’s equity. However, before selecting this option, there are some do’s and don’t you need to know!
Four Do’s and Don’t About Reverse Mortgages
1. Do make sure you understand how a reverse mortgage works
It’s essential that you understand how a reverse mortgage works. A reverse mortgage allows you to access the equity (or value) in your home without actually having to sell it. It’s a loan that you’ll have to pay back when you sell your house.
The maximum amount you’ll be able to borrow will depend on what your home is worth and how old you are. You can’t apply for a reverse mortgage until you’re at least 55. There are no restrictions on how you spend your reverse mortgage funds.
2. Do shop around when obtaining a reverse mortgage
As with obtaining a traditional mortgage, shopping around when getting a reverse mortgage for your Toronto home is essential. Different lenders will offer different rates for reverse mortgages.
When shopping around for a reverse mortgage, see what options a lender provides for reverse mortgages – such as lump sums versus monthly payouts.
3. Don’t spread yourself too thin when you get a reverse mortgage
If you obtain a reverse mortgage, it may seem like free money to you! Unlike a traditional loan, you don’t have to make regular payments on it – instead, money is paid out to you.
However, you’ll eventually need to repay your reverse mortgage for your Toronto home, so avoiding taking out too much equity in your house is essential. You want to ensure you have enough equity left to still pay for a smaller home, retirement home, or nursing home when you sell.
4. Don’t forget you have to pay a reverse mortgage back!
Finally, it’s important to remember that you’ll have to pay a reverse mortgage back. There are two ways to make this process easier:
- Shop around for a lower reverse mortgage rate. The lower your rate, the less you’ll have to pay back when you sell your house.
- Have a plan in place for paying your reverse mortgage back. Consider how long you want to stay in your current house and how much money you’ll need to afford to live somewhere else after you pay back your reverse mortgage.
We Can Help You Decide If A Reverse Mortgage Is Right For You
When you come to Northwood Mortgage, we can explain the various reverse mortgage options we offer, including the rates we offer on reverse mortgages and payout options.
We’ll walk you through the positives and negatives of a reverse mortgage and suggest other loan options if we don’t feel that a reverse mortgage suits your needs.
To learn more about the reverse mortgage rates we can offer you for a loan on your Toronto home, contact us online or at 888-257-8130.
