Ask Angela: Beware your home is not an ATM !!!!!

Beware your home is not an ATM !!!!!

Almost on a weekly basis, I get a call. Usually from a senior, telling me the most heartbreaking story. It is the same story, just different events with different people, with the eventual outcome is loss of family home. So what is the story I get?

I get a call, asking me if I could help them with their big problem.  The story goes, something like this.  About 5 years ago. there was a sickness, accident or loss of spouse. They run into money problems and refinance the family home. They may refinance in another couple of years, to pay the maxed out credit cards and bills, since they haven't solved their original problem of loss of income. They are virtually living on borrowed money. Then retirement happens or more importantly the CPP cheques arrives. Sticker shock hits them because it is less then they would have ever expected.  Mortgages need to be paid and the deeper in debt they go.  By the time they contact me, it is too late for me to do anything. They are over extended with no way to pay.  Sometimes family members can be called upon to help- but most families do not have those resources.

The senior walks away with huge losses, including the family home for which they worked so hard for. The stress, the guilt of losing the family home weighs deeply.

There are good uses for refinancing your home, but while investigating, always look ahead in time. Will you be able to make the payments in a few years? How about 5 years down the road? How about if you should get sick or lose a spouse.  It would be wonderful to have that magic mirror to see your future, but, you still need to do risk management to foresee what you can.

What other options are there instead of refinance?  Living modestly until the hard times passes?  If you are over 55-  a CHIP Reverse Mortgage may be the better option? Sell the home earlier and buy an affordable smaller house or condo, that can be paid outright leaving no mortgage payment?

An Accredited Mortgage Professional, is an excellent person to ask about your options. Ask them to also do a risk management study on all your options. Be informed and make your decisions with your head and not your heart.  Ultimately it will be your decision, be wise.

If you are or know of anyone struggling with these types of scenarios, help them help themselves, give them a contact name of a trusted Accredited Mortgage Professional.

Angela Kroemer Accredited Mortgage Professional
akroemer@mortgagegroup.com
250-650-4182