Key Differences Between Reverse Mortgages In Canada Versus The U.S.
A reverse mortgage is a type of financial loan that allows Canadian homeowners fifty-five years old or over who have little or no income to continue living in their home while they use their property as a source of income. This financing solution gives them access to tax-free cash with no mandatory ongoing payments.
While reverse mortgages are an ideal financial solution for many Canadians, there are a lot of myths surrounding them. Many of the reverse mortgage myths in Canada come from confusion with American reverse mortgage products, and this sometimes persuades people not to take out a reverse mortgage in Canada.
To help reveal the real truth about reverse mortgages, Straight Forward Mortgages - Stephen Guertin has pointed out some of the key differences between reverse mortgages in Canada versus the U.S. Keeping reading to know all about them.
1. Approval process
In Canada, the borrower must seek independent legal advice during the approval process before being approved for a reverse mortgage. Versus in the U.S, the Consumer Financial Protection Bureau provides counseling to reverse mortgage applicants.
2. Maximum mortgage amount
The maximum mortgage amount in Canada goes up to 55% of the home’s value, thus helping to maintain equity in the house. While in the U.S, a maximum of $625,500, and if the home’s value is under this limit, then the borrower can access a percentage.
3. The costs involved
In Canada, the fees involved in obtaining a reverse mortgage are independent legal advice fees, an appraisal fee, and standard closing or admin costs. In most cases, these fees can be included in the mortgage other than the appraisal cost. In the U.S, mortgage insurance premiums are added, origination fees, and third-party charges and servicing fees apply. The insurance premium, in most cases, is 0.5% of the loan amount but may vary with the lender.
For information about reverse mortgages, reach out to Straight Forward Mortgages - Stephen Guertin. As a leading mortgage agent and consultant in Oakville, Ontario, I can provide you with unbiased advice when it comes to mortgage financing. I have over thirteen years of experience and have access to over forty competing lenders, including major banks, credit unions, life insurance companies, trusts, and other national and regional lenders.
My services are extended to clients across Oakville, Toronto, Burlington, Mississauga, Milton, Hamilton, Clarkson, Peel Region, Halton Region, Ontario, and the surrounding areas.