Payments Are Not Required For CHIP Reverse Mortgages
After paying their mortgage religiously for years, seniors can access the equity in their home in the form of tax-free cash. This is what is commonly referred to as a CHIP Reverse Mortgage. It is simply a home equity line of credit for seniors. CHIP Reverse Mortgages are not new. They have been in the country since the late 1980s.
Unfortunately, there’s so much misconception regarding how CHIP Reverse Mortgages work. As the name suggests, a reverse mortgage doesn’t require you to make regular payments to the lender, instead, it pays you. You simply don’t have to make payments for your home for as long as you continue living there. You are only eligible for the reverse mortgages if you are 55 years or older.
Why Get A Chip Reverse Mortgage?
Perhaps the biggest benefit is the fact that homeowners can get up to 55% of their home’s value and may never have to make any monthly payments. The lender will look at different factors to determine the amount of money that you can receive such as the age of the applicant as well as the type and location of their home. The home will have to undergo an appraisal and this amount is used to determine the amount the borrower can receive.
How is The Money Received?
Each applicant is given the freedom to choose how they want to receive the money. There are those who may choose to receive it as a single lump sum. Others take out a small amount and the rest later. Most people opt to receive advances over a period of time. This guarantees the borrower a source of income every month from the mortgage lender.
Will You Owe More Than The Home’s Worth?
Once you take the CHIP Reverse Mortgage, you are still able to keep all the equity that was left in the home. The only amount of equity remaining will depend on how much you borrowed as well as the value of the home which fluctuates due to different factors and the time that has passed since the mortgage was approved.
Many seniors are skeptical about reverse mortgages because they assume that the bank will now own their homes. Well, this is never the case. You will still retain the title and ownership of your home even after taking the mortgage. However, the lender has certain requirements which you must meet. For instance, you may be required to live in the home for a specific period of time. Other conditions such as paying taxes and taking up property insurance may also be put in place by the lender.
Are There Costs Involved
Reverse mortgages may have certain one-time fees that need to be paid. For instance, you may need to pay an appraisal fee, an administration fee, a legal fee as well as insurance and title registration fees. The only amount that you will have to pay upfront is the appraisal fee. The rest are paid once you receive the money after the home equity reverse mortgage is approved.
The beauty of working with a mortgage brokerage is that they help you understand your options and get rid of the misconceptions. You get to make decisions based on actual facts with the help of a mortgage professional.
Learn More, Contact Us Today
If you are interested in learning more or have any questions about this article, please don’t hesitate to contact me directly and I would be happy to answer any questions you may have.
Patrick Palmer: The Mortgage Cat
Licensed Mortgage Agent (Lic.#16000311)
South Oakville Centre, 1515 Rebecca Street, Unit c33, Oakville, ON L6L 5G8