Frequently Asked Questions
Will a homeowner owe more than the home is worth?
The homeowner keeps all the equity remaining in the home. In our many years of experience, over 99% of homeowners have money left over when their loan is repaid. The equity remaining depends on the amount borrowed, the value of the home, and the amount of time that’s passed since the reverse mortgage was taken out.
Should a reverse mortgages be a last resort?
No. Many financial professionals recommend a reverse mortgage to supplement monthly income instead of selling and downsizing, or taking out a conventional mortgage or a line of credit.
How are pre-qualified and pre-approved different?
A pre-approval is very different than a pre-qualification – before you start shopping for a new home, you want to be sure that you get a pre-approval. A pre-qualification can normally be obtained very quickly by a simple phone call or completing a quick online form, providing information such as your income, debts, and assets, which is used to pre-qualify you in about 30 seconds without verifying the information. If you are estimating, make a mistake or forget about something, it could have a major negative impact on the amount you could qualify for, leading to problems down the road when the mortgage is properly verified by an underwriter. A mortgage pre-approval is what every home buyer should obtain prior to looking at homes. A mortgage pre-approval can be easily defined as a written commitment for a buyer from a mortgage lender. To obtain a mortgage pre-approval you will be required to provide the same documents that are required when formally applying for a mortgage, such as T4’s, employment letter, pay stubs, and bank statements. At Inspired Mortgage we fully underwrite your mortgage pre-approval upfront, so you can shop with confidence and have peace of mind when submitting your offer.
How much does it cost to use a Mortgage Broker?
There’s absolutely no charge for our services on typical residential mortgage transactions. How can we afford to do that? Like many other professional services, such as insurance, mortgage brokers are generally paid a finder’s fee when we introduce trustworthy, dependable customers to a financial institution. These fees are quite standard and nearly industry-wide so that the focus remains on you, the customer. If your situation is a little more complicated and we need to source alternative lending solutions, there could be additional fees associated with obtaining your financing. These fees are typically in the range of 1%-2% of the loan amount and are only paid once mortgage is approved and closed. Your Mortgage Broker will let you know up front if any additional fees may be required, so you know exactly what your costs will be before you start shopping for a home
Why should I use a Mortgage Broker over my bank?
A Mortgage Broker has access to many different lenders and mortgage products, including those from some of the big banks. Choosing to work with a Mortgage Broker simply provides you more options than what your bank can provide and more choice means more competitive rates and better terms! A Mortgage Broker works for YOU, not the banks, to provide independent, unbiased advice on the best mortgage products available from multiple lenders. A good Mortgage Broker will also work with you throughout the life of your mortgage to ensure it remains aligned to your financial goals and notify you of any opportunities to make changes and save even more money – when was the last time your bank called to inform you of available savings?
How do I start the process of buying a home?
The first thing you want to do when you’re ready to start exploring home ownership is to connect with a reputable and trusted Mortgage Broker to guide you through the process of a mortgage pre-approval. With a pre-approval in hand, you will know exactly how much you can afford when you’re ready to start shopping for new home! To find a Mortgage Broker that’s right for you, do some research, check out their reviews, ask friends, family and your Realtor for any recommendations.
What if the homeowner can’t afford payments?
There are no monthly payments required as long as the homeowner is living in the home.
What fees are associated with a reverse mortgage?
There are one time fees to arrange a reverse mortgage such as an appraisal fee, fee for independent legal advice as well as our fee for administration, title insurance, and registration. With the exception of the appraisal fee, these fees are paid for with the funding dollars.
Will the bank own the home?
No. The homeowner retains title and maintains ownership of the home. It’s required for the homeowner to live in the home, pay taxes on time, have property insurance, and maintain the property in good condition.
What if the homeowner has an existing mortgage?
Many of our clients use a reverse mortgage to pay off their existing mortgage and debts.