Ron Richards

Reverse Mortgage: 3 Myths and Misconceptions

🏠 Myth 1: "I will lose my home" or "The bank will own my home."
False! With a reverse mortgage, homeowners retain 100% ownership of their home. There is no change to ownership on title, and homeowners can stay in their home for as long as they choose. Property taxes, home insurance, and upkeep of the home are the only requirements. The mortgage registers on title like any traditional mortgage.

💰 Myth 2: "I will owe more than my house is worth."
Highly unlikely! Guidelines are in place to protect homeowners from this scenario. Restrictions on loan-to-value (LTV) ratios ensure that the balance of the mortgage does not exceed the market value of the home. The younger the applicant, the lower the LTV and loan amount. The lender's Home Equity Guarantee takes it a step further, ensuring that borrowers never owe more than the fair market value of their home. The lender absorbs the difference if the reverse mortgage balance exceeds the market value.

👨‍👩‍👧‍👦 Myth 3: "There will not be enough equity left for my kids."
Not true! While the reverse mortgage balance grows over time with accrued interest, home prices also rise. In fact, 99% of reverse mortgage borrowers have equity in their homes when the mortgage is repaid. For most, this equity is over 50% of their home value. So rest assured, there will be equity left for your kids.

Learn the truth about reverse mortgages and how they can benefit you and your family. Don't let these myths hold you back from exploring a valuable financial option.

The Bank of Canada has decided to maintain its overnight rate at 5%, with the Bank Rate at 5.25% and the deposit rate at 5%. Here are the key points from their recent announcement:

* The global economy is expected to grow at about 3%, with inflation in most advanced economies easing gradually.
* The US economy has been stronger than expected, supported by resilient consumption and robust business and government spending.
* The euro area is projected to gradually recover from weak growth.
Global oil prices have increased, averaging about $5 higher than previously assumed.
* Bond yields have increased, but overall financial conditions have eased due to narrower corporate credit spreads and higher equity markets.
* The Bank has revised up its forecast for global GDP growth to 2.75% in 2024 and about 3% in 2025 and 2026.
* Inflation is slowing across most advanced economies, with rates projected to reach central bank targets in 2025.

In Canada:

* Economic growth stalled in the second half of last year, and the economy moved into excess supply.
* Labour market conditions are easing, with employment growing more slowly than the working-age population.
* The unemployment rate reached 6.1% in March, with signs that wage pressures are moderating.
* Economic growth is forecast to pick up in 2024, driven by strong population growth and a recovery in household spending.
* Residential investment is strengthening, responding to robust demand for housing.
* The Bank expects GDP growth of 1.5% in 2024, 2.2% in 2025, and 1.9% in 2026.
* CPI inflation slowed to 2.8% in February, with easing in price pressures across goods and services.
* The Bank expects CPI inflation to be close to 3% in the first half of this year, moving below 2.5% in the second half, and reaching the 2% target in 2025.

The Bank decided to hold the policy rate at 5% and continue to normalize its balance sheet. While inflation is still high, recent months have seen further easing in CPI and core inflation. The Bank will be monitoring core inflation and the balance between demand and supply in the economy, among other factors, as it remains committed to restoring price stability for Canadians.