
Home Run: The Reverse Mortgage Advantage – Chapter 5: Why Reverse Mortgages Outshine the Alternatives
Home Run: The Reverse Mortgage Advantage is the latest book by HomeEquity Bank CEO Steve Ranson and EVP of Marketing Yvonne Ziomecki. In it, the pair take a deep dive into why a reverse mortgage could be the right option for your 55+ clients, exploring stats and facts about this demographic as well as interviews with experts and HomeEquity Bank customers.
Chapter 5 of Home Run looks at the alternatives to a reverse mortgage, weighs the pros and cons of each, and explains why the CHIP Reverse Mortgage outshines them all.
Downsizing
When people think about how to make the most of the equity they have in their home, they often think of downsizing. When we’re younger and the prospect of downsizing seems far off, it might seem like an adventure to move somewhere new. But when it comes to it, things can look very different. We hear stories of people who have downsized, only to miss their old community. And with loneliness on the rise among seniors, staying close to the people and places they know could be key to your clients’ wellbeing.
Another factor to consider is the cost. According to an IPSOS survey commissioned by HomeEquity Bank, 27% of downsizers found costs were higher than expected.
When people opt to downsize, they often move into a condo or rental property, but these can have their own drawbacks. Condos often come with high monthly service fees and neighbours in close quarters who aren’t always the most considerate. And if they decide to rent, your clients need to factor in rent increases, as well as the possibility of being evicted or having a landlord who isn’t as attentive to repairs as they would like.
Home Equity Line of Credit
Home equity lines of credit (HELOCs) or home equity loans are two well-known ways for people to access the cash in their home. And while HELOCs can be good for short-term borrowing, the reverse mortgage can offer a more long-term solution.
HELOCs are demand loans, meaning they can be called for repayment at any time. This is particularly common if one spouse dies, leaving the other with a lower income. In these cases, the house often has to be sold to repay the loan. With the CHIP Reverse Mortgage, on the other hand, the homeowners are guaranteed to stay in their home, as the loan is only repaid when they move out or both pass away.
The CHIP Reverse Mortgage also offers more senior-friendly borrowing requirements than a HELOC. With a HELOC you must prove that you’re able to make regular payments in order to service the debt monthly. With the CHIP Reverse Mortgage, monthly repayments are not required, so the your clients main qualification criteria is owning their own home.
Credit Cards and other alternatives
Credit cards are another alternative, but these should be avoided at all costs – we all know about their exorbitant interest rates, with some as high as 20%. The same goes for second mortgages and other alternative lending options.
Many of our now-customers came to us with crushing credit card debt and were relieved to find a way out of it with the CHIP Reverse Mortgage.
Legacy
One concern some people raise about a reverse mortgage is that they’ll have nothing to pass down to their children, however the vast majority of the time that isn’t the case. Typically, the house appreciation exceeds the interest owed. And in over 99% of cases there is money left over for heirs when the principal and the interest are paid back.
If you want to learn more about how the CHIP Reverse Mortgage could be the best option for your 55+ clients, contact your BDM or order your copy of Home Run: The Reverse Mortgage Advantage here
- Posted by Samrat
- On June 23, 2021
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