Why there’s a sudden surge in reverse mortgages

Soaring home prices likely to blame

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From the September/October 2014 issue of the magazine.

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The number of reverse mortgages in Canada increased 29% year-over-year in June—a significant jump. Fee-only planner Jason Heath says the rise is due to soaring home prices in Canada, allowing seniors with limited income to use reverse mortgages to tap into their growing home equity. But Heath warns that using reverse mortgages is risky, because they permanently eat through your home equity, and they do so quickly. A more prudent option is a home-equity line of credit. If you’re really short on cash, it’s often better to sell your house, spend some of the proceeds, and rent.

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Source: HomEquityBank

One comment on “Why there’s a sudden surge in reverse mortgages

  1. But what happens if two seniors need money to fix up the house so they can sell it at a reasonable price? They aren’t working so no one will give them a loan. Even if they do get a loan, and if they sell the house for $250,000 and pay $1000 rent, as well as the needed $1000 per month to pay life insurance, car insurance, groceries, clothing etc, that only lasts 125 months or roughly 10 years. If one dies, their revenue is cut by half or more, especially if it’s the husband who dies. Now the other is expected to live on less with the husband’s monthly death benefit and her meager Canada retirement benefits (unless she was lucky enough to work 30-40 years herself, before retiring).

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