Monday, January 15, 2018

Top 8 Misconceptions About Reverse Mortgages In Canada

Top 8 Misconceptions

There is little doubt that reverse mortgages are one of the most misunderstood financial products in Canada.

You might be wondering: where does this misunderstanding come from?

Well we already know the answer, it is very simple.  This misunderstanding comes from the U.S.A.

We have talked about this many times before and the fact that there are two products with the same name available in both Canada and the U.S.A. leads to a lot of confusion. We have covered this in great detail in our free reverse mortgage guide (if you haven’t already got a copy of this, get one at http://ift.tt/2w1li7v.

Essentially, the 2 products are completely different in many ways.

So today we thought we’d outline what we believe are the top 8 biggest misconceptions that we encounter.

 

The Top 8 Misconceptions

  1. I Will Lose My Home

Easily coming in at number 1, is the idea that you will lose your home.  The ironic thing is that this product was actually designed to let you stay in your home for life – and this is actually more of a disadvantage rather than advantage!

In Canada it is actually written into the legal contract that you cannot lose your home to a reverse mortgage.

Nobody in Canada has ever, ever, ever lost their home because of this product.  It is literally impossible.

 

  1. I Will Lose My Home Equity

The next logical worry is that you will lose all the equity in your home as the interest grows.  This is a legitimate concern – unlike number 1 – but most people are overly concerned like this because they do not understand home value appreciation.

The simple fact is that for a lot of people in Canada their home equity is actually increasing while they hold a reverse mortgage.  This is because home appreciation rates are higher than interest rates and because home appreciation grows 100% of the property – unlike the mortgage which only grows up to 55%.

For more on this, including the latest interest rates, see our article on this – click here.

In addition to this, people fail to appreciate how much interest they pay under a normal mortgage – because it is blended in with the payments, so they don’t really notice it.

Finally, add in the fact that 99% of Canadian homes under a reverse mortgage still had equity remaining in them when the mortgage was discharged and that should ease your concerns regarding this.

 

  1. I Can’t Make Any Payments

Like a normal mortgage, you can repay the balance owed anytime.  If you paid off the whole thing, penalties apply in the first 5 years; however you can also pay off up to 10% every year with no penalty. This is exactly how a traditional mortgage works as well.

In fact, several people choose to make payments of the interest only – effectively turning their reverse mortgage into a Home Equity Line Of Credit (HELOC).  We created a special product name – we call this a ‘RM-HELOC – read more about it here‘.

 

  1. I Already Have A Mortgage – Do I Still Qualify?

Actually, taking out a reverse mortgage to pay off an existing mortgage – and free up your cash – is one of the most popular reasons for our customers taking this product.

Many people use this to free themselves from the burden of their monthly mortgage payment.

It should also be borne in mind that any existing mortgage must be paid off in full and you only get to keep the leftover funds after this. Still, even if there are no leftover funds, then freeing yourself from that pesky monthly mortgage payment could be worth it just by itself.

 

  1. My Family Won’t Like It

Obviously family issues vary from person to person and family to family.  However, we have actually seen reverse mortgages initiated by family members and well supported by them.  In addition to this we have also seen:

  • The money being used to gift family members their inheritance early
  • The money being used to help family members with a down-payment on their home – especially in hot markets like Toronto and Vancouver.

I believe you should absolutely have the conversation with your family members.  Educate them on this product too (feel free to send these articles to them!) – or many of them might believe some of the misconceptions on this page.

 

  1. The Rates Are Too High

First of all, there is no doubt that interest rates are higher than that you can get with a traditional mortgage or a Home Equity Line Of Credit (HELOC).

However, you have to remember that they are completely different products to these – with a much lower risk.  With a traditional mortgage or HELOC you could lose your home if you don’t make payments – that is because you are required to make payments and you are also required to qualify for them.

A reverse mortgage is completely risk free (in terms of losing your home), tax free and you are not required to make any payments.  So of course they are at a higher rate – this is the ‘price’ you pay to get all these benefits.

In addition to this, the interest rate is much lower than some car loans, credit cards, normal loans or a line of credit (unsecured).  All these products are much worse – in terms of the risk to you as well.

 

  1. My Estate Size Is Being Reduced

This is true – but only if you spend the money!  The easiest way to show this is with an example:

Calculation Example

In this example, the person is taking out a $200,000 reverse mortgage.  As you can see, the total estate size is not impacted – as they have not yet spent any of the cash!

In future, the home value will continue to grow and – depending on the home appreciation they get – they could actually still see their estate size grow over time.

 

  1. My Neighbour/Friend/Relative Says They Are Bad!

Finally, the largest misconception usually comes from people around you saying they are ‘bad’ – usually without understanding the product at all.

In addition to this, these people usually believe one of the above statements and do not understand the trade off between home value appreciation and interest that is vital to understand before making your decision on this (see number 2 above).

My advice would be to do your research, learn the real facts and then make an informed and educated decision about if they are the right solution for you.

 

Top 8 Misconceptions In Summary

There are many incorrect and ignorant beliefs about this kind of home loan.  In this article we addressed the top 8.

Do you have any questions or concerns not addressed in this article?  Leave a comment below and we will answer them for you.

 

Top 8 Misconceptions About Reverse Mortgages In Canada first appeared on:
Reverse Mortgage Pros
Suite 201,
8 Sampson Mews
Toronto,
ON,
M3C 0H5
1-888-358-7771
https://goo.gl/TwzUYA

Top 8 Misconceptions About Reverse Mortgages In Canada

Top 8 Misconceptions

There is little doubt that reverse mortgages are one of the most misunderstood financial products in Canada.

You might be wondering: where does this misunderstanding come from?

Well we already know the answer, it is very simple.  This misunderstanding comes from the U.S.A.

We have talked about this many times before and the fact that there are two products with the same name available in both Canada and the U.S.A. leads to a lot of confusion. We have covered this in great detail in our free reverse mortgage guide (if you haven’t already got a copy of this, get one at http://ift.tt/2w1li7v.

Essentially, the 2 products are completely different in many ways.

So today we thought we’d outline what we believe are the top 8 biggest misconceptions that we encounter.

 

The Top 8 Misconceptions

  1. I Will Lose My Home

Easily coming in at number 1, is the idea that you will lose your home.  The ironic thing is that this product was actually designed to let you stay in your home for life – and this is actually more of a disadvantage rather than advantage!

In Canada it is actually written into the legal contract that you cannot lose your home to a reverse mortgage.

Nobody in Canada has ever, ever, ever lost their home because of this product.  It is literally impossible.

 

  1. I Will Lose My Home Equity

The next logical worry is that you will lose all the equity in your home as the interest grows.  This is a legitimate concern – unlike number 1 – but most people are overly concerned like this because they do not understand home value appreciation.

The simple fact is that for a lot of people in Canada their home equity is actually increasing while they hold a reverse mortgage.  This is because home appreciation rates are higher than interest rates and because home appreciation grows 100% of the property – unlike the mortgage which only grows up to 55%.

For more on this, including the latest interest rates, see our article on this – click here.

In addition to this, people fail to appreciate how much interest they pay under a normal mortgage – because it is blended in with the payments, so they don’t really notice it.

Finally, add in the fact that 99% of Canadian homes under a reverse mortgage still had equity remaining in them when the mortgage was discharged and that should ease your concerns regarding this.

 

  1. I Can’t Make Any Payments

Like a normal mortgage, you can repay the balance owed anytime.  If you paid off the whole thing, penalties apply in the first 5 years; however you can also pay off up to 10% every year with no penalty. This is exactly how a traditional mortgage works as well.

In fact, several people choose to make payments of the interest only – effectively turning their reverse mortgage into a Home Equity Line Of Credit (HELOC).  We created a special product name – we call this a ‘RM-HELOC – read more about it here‘.

 

  1. I Already Have A Mortgage – Do I Still Qualify?

Actually, taking out a reverse mortgage to pay off an existing mortgage – and free up your cash – is one of the most popular reasons for our customers taking this product.

Many people use this to free themselves from the burden of their monthly mortgage payment.

It should also be borne in mind that any existing mortgage must be paid off in full and you only get to keep the leftover funds after this. Still, even if there are no leftover funds, then freeing yourself from that pesky monthly mortgage payment could be worth it just by itself.

 

  1. My Family Won’t Like It

Obviously family issues vary from person to person and family to family.  However, we have actually seen reverse mortgages initiated by family members and well supported by them.  In addition to this we have also seen:

  • The money being used to gift family members their inheritance early
  • The money being used to help family members with a down-payment on their home – especially in hot markets like Toronto and Vancouver.

I believe you should absolutely have the conversation with your family members.  Educate them on this product too (feel free to send these articles to them!) – or many of them might believe some of the misconceptions on this page.

 

  1. The Rates Are Too High

First of all, there is no doubt that interest rates are higher than that you can get with a traditional mortgage or a Home Equity Line Of Credit (HELOC).

However, you have to remember that they are completely different products to these – with a much lower risk.  With a traditional mortgage or HELOC you could lose your home if you don’t make payments – that is because you are required to make payments and you are also required to qualify for them.

A reverse mortgage is completely risk free (in terms of losing your home), tax free and you are not required to make any payments.  So of course they are at a higher rate – this is the ‘price’ you pay to get all these benefits.

In addition to this, the interest rate is much lower than some car loans, credit cards, normal loans or a line of credit (unsecured).  All these products are much worse – in terms of the risk to you as well.

 

  1. My Estate Size Is Being Reduced

This is true – but only if you spend the money!  The easiest way to show this is with an example:

Calculation Example

In this example, the person is taking out a $200,000 reverse mortgage.  As you can see, the total estate size is not impacted – as they have not yet spent any of the cash!

In future, the home value will continue to grow and – depending on the home appreciation they get – they could actually still see their estate size grow over time.

 

  1. My Neighbour/Friend/Relative Says They Are Bad!

Finally, the largest misconception usually comes from people around you saying they are ‘bad’ – usually without understanding the product at all.

In addition to this, these people usually believe one of the above statements and do not understand the trade off between home value appreciation and interest that is vital to understand before making your decision on this (see number 2 above).

My advice would be to do your research, learn the real facts and then make an informed and educated decision about if they are the right solution for you.

 

Top 8 Misconceptions In Summary

There are many incorrect and ignorant beliefs about this kind of home loan.  In this article we addressed the top 8.

Do you have any questions or concerns not addressed in this article?  Leave a comment below and we will answer them for you.

 

Top 8 Misconceptions About Reverse Mortgages In Canada first appeared on:
Reverse Mortgage Pros
Suite 201,
8 Sampson Mews
Toronto,
ON,
M3C 0H5
1-888-358-7771
https://goo.gl/TwzUYA


by Reverse Mortgage Pros via Reverse Mortgage Pros

Friday, January 5, 2018

Mortgage Options For Seniors

Introduction

Home is where everyone feels comfortable and it is a vital part of everyone’s life. If you are in your 50’s or 60’s, you have lived many years in your house and have thousands of memories there. You have raised your children there and spend valuable time with your friends and family.

But, the house which homed your memories may turn into a real problem if you don’t plan ahead. For many people, the strain is maintenance and for others, the strain is financial in the form of bills and mortgage. You can learn more on typical senior mortgage problems here.

In this guide, you will learn about the possible options of the mortgage after retirement. We have gathered valuable information which will help you in making the right decision, however, we would recommend you to do further research on Mortgage Financing Options for People 55+ before making any commitments.

Mortgage Options

While living in Canada, you may find a bundle of mortgage options but not every option is suitable for you. Selection of the right mortgage option depends upon whether you want to downsize your property or want to reinforce it.

There are many loan options available in Canada, and some of those are discussed below:

  • Standard Mortgage

It is a traditional mortgage plan and lasts between 5-30 years. If you have a good credit rating and income, you are eligible for this mortgage.

  • Second Mortgage

If you have low cash, then you should go for Second Mortgage. This type of loan has higher interest rates and involve more risk as well.

  • Refinanced Mortgage

When you change loan type like change amount of loan, length of loan or rate, you are actually applying for a Refinanced mortgage.

You can learn more on Mortgage options here.

Protecting Yourself

Anything that involves money and seniors is incomplete without warning about scams. People always look to take advantage from seniors who do not have enough sense to make the right decision on their property.

It is highly recommended to consult an attorney or financial advisor before making any decision about the mortgage. Keep in mind the following tips if you want to avoid scams:

  • Carefully read the fine print before signing anything.
  • If anyone is rushing you, it means you are about to be looted.
  • Have proper market analysis.
  • Keep in touch with the neighbors of the house which is sold.
  • Search the web and have an estimated rate of the neighborhood areas of your house.

Additional info

Other than what we have mentioned, do visit the following links to have a deeper understanding of mortgage options for seniors:

http://ift.tt/2lYHTLT

http://ift.tt/2CIOPHn

Conclusion

It is almost impossible to cover all the factors in one guide. However, as we mentioned above, you should make further research before committing to anything. Here are few things which you should consider before signing any paper:

  • If you live in a house which is too big for you, downsize.
  • If you are about to retire with a mortgage, do whatever it takes to make it affordable.
  • If you find yourself in trouble, a reverse mortgage can be a decent asset for you.

The decision you will make about your house and mortgage will have a deep impact on your life and the ones who are close to you. Your house may become the best financial asset for you, so learn how to invest it properly.

 

 

 

 

 

 

 

Mortgage Options For Seniors first appeared on:
Reverse Mortgage Pros
Suite 201,
8 Sampson Mews
Toronto,
ON,
M3C 0H5
1-888-358-7771
https://goo.gl/TwzUYA

Mortgage Options For Seniors

Introduction

Home is where everyone feels comfortable and it is a vital part of everyone’s life. If you are in your 50’s or 60’s, you have lived many years in your house and have thousands of memories there. You have raised your children there and spend valuable time with your friends and family.

But, the house which homed your memories may turn into a real problem if you don’t plan ahead. For many people, the strain is maintenance and for others, the strain is financial in the form of bills and mortgage. You can learn more on typical senior mortgage problems here.

In this guide, you will learn about the possible options of the mortgage after retirement. We have gathered valuable information which will help you in making the right decision, however, we would recommend you to do further research on Mortgage Financing Options for People 55+ before making any commitments.

Mortgage Options

While living in Canada, you may find a bundle of mortgage options but not every option is suitable for you. Selection of the right mortgage option depends upon whether you want to downsize your property or want to reinforce it.

There are many loan options available in Canada, and some of those are discussed below:

  • Standard Mortgage

It is a traditional mortgage plan and lasts between 5-30 years. If you have a good credit rating and income, you are eligible for this mortgage.

  • Second Mortgage

If you have low cash, then you should go for Second Mortgage. This type of loan has higher interest rates and involve more risk as well.

  • Refinanced Mortgage

When you change loan type like change amount of loan, length of loan or rate, you are actually applying for a Refinanced mortgage.

You can learn more on Mortgage options here.

Protecting Yourself

Anything that involves money and seniors is incomplete without warning about scams. People always look to take advantage from seniors who do not have enough sense to make the right decision on their property.

It is highly recommended to consult an attorney or financial advisor before making any decision about the mortgage. Keep in mind the following tips if you want to avoid scams:

  • Carefully read the fine print before signing anything.
  • If anyone is rushing you, it means you are about to be looted.
  • Have proper market analysis.
  • Keep in touch with the neighbors of the house which is sold.
  • Search the web and have an estimated rate of the neighborhood areas of your house.

Additional info

Other than what we have mentioned, do visit the following links to have a deeper understanding of mortgage options for seniors:

http://ift.tt/2lYHTLT

http://ift.tt/2CIOPHn

Conclusion

It is almost impossible to cover all the factors in one guide. However, as we mentioned above, you should make further research before committing to anything. Here are few things which you should consider before signing any paper:

  • If you live in a house which is too big for you, downsize.
  • If you are about to retire with a mortgage, do whatever it takes to make it affordable.
  • If you find yourself in trouble, a reverse mortgage can be a decent asset for you.

The decision you will make about your house and mortgage will have a deep impact on your life and the ones who are close to you. Your house may become the best financial asset for you, so learn how to invest it properly.

 

 

 

 

 

 

 

Mortgage Options For Seniors first appeared on:
Reverse Mortgage Pros
Suite 201,
8 Sampson Mews
Toronto,
ON,
M3C 0H5
1-888-358-7771
https://goo.gl/TwzUYA


by Stephanie via Reverse Mortgage Pros

Thursday, December 28, 2017

Home Page

Home Page first appeared on:
Reverse Mortgage Pros
Suite 201,
8 Sampson Mews
Toronto,
ON,
M3C 0H5
1-888-358-7771
https://goo.gl/TwzUYA


by Reverse Mortgage Pros via Reverse Mortgage Pros

Home Page

Home Page first appeared on:
Reverse Mortgage Pros
Suite 201,
8 Sampson Mews
Toronto,
ON,
M3C 0H5
1-888-358-7771
https://goo.gl/TwzUYA

Friday, December 22, 2017

Investment Planning for Retirement

Investment Planning is the putting of assets into the best possible speculation vehicles in light of the financial specialist’s future objectives, time skyline, and needs. In a perfect world, appropriate venture arranging will enable the speculator’s assets to deliver monetary rewards after some time.

Investment Planning for retirement

Build a Total Return Portfolio

One regular approach to make retirement wage is to develop an arrangement of stock and security record subsidizes (or work with a monetary counsel who does this). The portfolio is intended to accomplish a respectable long haul rate of return, and en route, you take after a recommended set of withdrawal rate decides that will regularly enable you to take out 4-7 percent a year, and in a few years, increment your withdrawal for swelling.

The aggregate return approach is best utilized by experienced financial specialists, the individuals who appreciate dealing with their cash and have a past filled with making intelligent, trained choices, or by enlisting professional mortgage help who utilize this approach. At the point when done right, an aggregate return portfolio is a standout amongst other retirement ventures you can make.

Utilize Retirement Income Funds

Retirement salary stores are a specific sort of common reserve. They naturally apportion your cash over an expanded arrangement of stocks and securities, frequently by owning a choice of other common assets. The ventures are made do with the objective of delivering month to month pay which is conveyed to you. These assets are built to give an across the board bundle that is intended to achieve a specific target.

Prompt Annuities

All annuities are a type of protection as opposed to a speculation. I incorporate them on the best retirement venture list in light of the fact that their motivation is to create wage and that is the thing that you require in retirement.

Prompt annuities can be a decent answer for the individuals who don’t have numerous different wellsprings of ensured pay, for the individuals who have a tendency to be over-spenders (which means they may spend a singular amount of cash awfully rapidly and after that have nothing left) and for single people with long futures.

Purchase Bonds

When you purchase a bond, you advance your cash to either the administration, an enterprise or a region. The borrower consents to pay you enthusiasm for a set measure of time and when the bond develops your essential is come back to you. The intrigue salary, or yield, you get from a bond (or from a security subsidize) can be an unfaltering wellspring of retirement wage.

Rental Real Estate

Investment property can give a steady wellspring of salary, however there will be upkeep necessities, and when you possess land, you will unavoidably cause unexpected costs. Before you purchase investment property you have to compute all the potential costs you may bring about finished the normal time period you intend to claim the property. You additionally need to factor in opening rates—no property will be leased 100 percent of the time.

Variable Annuity with a Lifetime Income Rider

A variable annuity is not an indistinguishable kind of venture from a prompt annuity. In a variable annuity, your cash goes into an arrangement of speculations that you pick. You take an interest in the increases and misfortunes of those speculations, however for an extra charge, you can include ensures, called riders. Think about a rider like an umbrella—you may not require it, but rather it is there to secure you in a most dire outcome imaginable.

Keep Some Safe Investments

You generally need to keep a segment of your retirement interests in safe options. The essential objective of any sheltered speculation is to secure what you have instead of create an abnormal state of current salary. Likewise, in the event that you don’t know what to do with your cash, stop it in a sheltered speculation while you set aside the opportunity to settle on an informed choice. An excessive number of individuals hurry to put their cash into a venture since they feel like it ought not be sitting in the bank for a really long time. They wind up settling on a surge choice, which is never a smart thought.

Income Producing Closed-End Funds

The greater part of shut end reserves are intended to deliver month to month or quarterly pay. This salary can originate from intrigue, profits, secured calls, or at times from an arrival of main. Each store has an alternate goal; some claim stocks, others possess bonds, some compose secured calls to produce wage, others utilize something many refer to as a profit catch procedure. Make certain to do your examination before purchasing.

Profits and Dividend Income Funds

Rather than purchasing singular stocks that compensation profits, you can pick a profit salary support, which will claim and oversee profit paying stocks for you. Profits can give a relentless wellspring of retirement salary that may rise every year if organizations increment their profit payouts—yet in terrible circumstances, profits can likewise be decreased, or ceased by and large. Many traded on an open market organizations create what are called “qualified profits” which implies the profits are saddled at a lower impose rate than conventional pay or premium pay. Consequently, it might be most duty effective to hold subsidizes or stocks which create qualified profits inside non-retirement accounts (which means not within an IRA, Roth IRA, 401(k), and so on.)

Real Estate Investment Trusts (REITs)

A land venture trust, or REIT, resembles a shared store that claims land. A group of experts deals with the property, gather lease, pay costs, gather an administration expense for doing as such, and appropriate the rest of the salary to you, the financial specialist. REITs may spend significant time in one sort of property, for example, loft structures, office structures, or inns/motels. There are non-traded on an open market REITs, normally sold by an agent or enlisted delegate who gets a commission, and additionally traded on an open market REITs which exchange on a stock trade and can be purchased by anybody with an investment fund.

Investment Planning for Retirement first appeared on:
Reverse Mortgage Pros
Suite 201,
8 Sampson Mews
Toronto,
ON,
M3C 0H5
1-888-358-7771
https://goo.gl/TwzUYA