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CHIP Reverse Mortgages have been in Canada since 1986. Despite this fact there is still a lot of misunderstanding of what they really are. Contact us today as we will be happy to explain all of the benefits of this type of mortgage.
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Unlike your standard mortgage where you make regular payments to a financial institution or private lender a CHIP Reverse Mortgage pays you. That is the big difference with a CHIP Reverse Mortgage. You do not have to make any payments (principal or interest) for as long as you and your spouse reside in your home. A Reverse Mortgage is designed exclusively for homeowners who are 55 years and older.
The great news is that homeowners can receive up to 55% of the value of your home. The specific amount you can receive is based on the age of the applicants, home type and location and the appraised value of that home. Applicants can choose how they want to receive the money. The CHIP Reverse Mortgage gives applicants options of how the want to receive the money they qualify for. They can either receive it in a one lump sum advance or can take some out now and then later or can get planned advances over a specified period of time.
Commonly asked questions about CHIP Reverse Mortgages.
Will the homeowner owe more than the house is worth?
The homeowner will keep all the equity that remains in the home. The amount of the remaining equity depends on the amount borrowed, the value of the home (which changes over time), and the amount of time that’s passed since the reverse mortgage was taken out.
Will the bank own the home?
No, they will not. The homeowner retains title and maintains ownership of the home. The requirements of the homeowner are to live in the home, pay their taxes on time, have property insurance, and maintain the property in good condition.
Does it matter if the homeowner has an existing mortgage?
No it does not matter as some clients use the CHIP Reverse Mortgage to pay off their existing and debts.
What costs are involved with a reverse mortgage?
The one-time fees that are associated with arranging a reverse mortgage are; an appraisal fee, a fee for independent legal advice, an administration fee, title insurance and registration. All fees can be paid for with the funding dollars received except for the appraisal fee which is typically paid up front.
What if home owners can’t afford the monthly payments?
The beauty of the CHIP Reverse Mortgage is that there are no monthly payments needed if the homeowner is living in their home.
Is the money you get from the Reverse Mortgage tax-free?
Yes, the money you receive is tax-free! It is not added to your income and does not effect your Old Age Pension and Canada Pension Plan benefits.
Should a reverse mortgage only be considered as a loan of last resort??
No as there are many benefits associated with reverse mortgages. Many professionals recommend reverse mortgages to their clients. These mortgages can supplement monthly income instead of selling or downsizing your home. With low qualifying guidelines, these mortgages become accessible to those who may not be able to qualify for other types of lending.