How Does a Reverse Mortgage Work?

How Does a Reverse Mortgage Work?

If there are dreams you have, but don’t have the money to do them, you might want to check into obtaining a reverse mortgage in Canada. Many homeowners don’t know the difference between a reverse mortgage and a traditional mortgage, much less how one works. Below you will find an answer to the often-asked question How Does a Reverse Mortgage Work?

The biggest and best difference when it comes to a reverse mortgage over a traditional mortgage is simple. You have to pay payments with a traditional mortgage, while with a reverse mortgage, you are the one who is getting paid. As long as you or your spouse lives in the house, you will never have to make payments again.A reverse mortgage is only available to homeowners who are 55 years of age and older. Homeowners normally receive up to 50 percent of what their home is worth. There are a few things that will determine exactly how much you get with this kind of mortgage; these factors are listed below.

  • The age of you and your spouse at the time you apply for the loan
  • The type of home you have
  • The location that your home is in
  • The appraised value of your home and any existing charges or debts that are against your home at the time that you request the loan.

One good thing about this type of loan is that you get to choose how you want to receive your payments. You can choose to get one lump sum, monthly payments, or even a credit line. Another major benefit is that you get this money tax-free and don’t have to pay on the loan unless you move out of the home.

What you do with the money that you receive for your reverse mortgage is totally up to you. You can go on a vacation, make improvements to your home, or even sock it all away for a rainy day. The only stipulation is that any outstanding debt you owe on the home must be paid before you can get a reverse mortgage.

If you are looking to get into a reverse mortgage, then now is the time to do it. It is time to take charge of your future, and in today’s uncertain economy, it would be nice to not have monthly mortgage payments. The choice is yours of course, but a reverse mortgage beats a traditional mortgage any day of the week for a number of people.

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