What if both spouses pass away unexpectedly just after the annuity begins?
What if the equity of the home (sold after the death of the surviving spouse) is insufficient to pay the mortgage and accrued interest? Is the estate liable for the shortfall?
Can you move out of the house, rent it, and still maintain the reverse mortgage plan? What are the tax implications, if any, of this option?
If the annuity is for life, is there a minimum guaranteed period of payment or will payments stop immediately upon the death of the holder and/or the death of the surviving spouse?
How will the income received under the proposed plan be taxed?
Will the income received affect your eligibility under any federal or provincial housing or social programs?
How will your children feel about the fact that the equity in your house could be substantially or completely eroded as an asset of the estate?
You can find out more about reverse mortgages by referring to the Yellow Pages, under “financial planners” or “mortgages”. The process of obtaining a reverse mortgage or RAM takes about four to six weeks on average, including the home appraisal, annuity calculations and other matters. As mentioned, the complexity of these plans makes it essential for you to obtain independent legal and tax advice in advance, and thoroughly compare the features and benefits to determine if this concept or other alternatives, such as renting out a basement suite or cashing out and downsizing to a condo, are more appropriate for your needs.
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