Gordon Pape points out two big disadvantages to reverse mortgages:
They have a notably higher interest rate than home equity loans.
You can only get up to 40% of your home’s value in cash instead of up to 80%+ with a home equity loan.
Of course, you make no payments with a reverse mortgage.
Landlord can raise rents up to 1.4% in 2008 according to the new Residential Tenancies Act guidelines. Source: Toronto Real Estate Blog
Lawmakers in the U.S. are pushing a new bill called the Fair Mortgage Practices Act. It would create a national registry for mortgage originators and require them to have criminal background checks. Borrowers would also have to be “fully evaluated” on their ability to repay their loans. One big plus for consumers would be the elimination of penalties for refinancing out of high-interest mortgages.
ING has captured 3.4% market share in Canadian mortgages in its 5 years in the industry. It doesn’t seem like much but ING is investing heavily in its mortgage “infrastructure” and growing by 26% a year.