Talking About Reverse Mortgages With Your Parents

A reverse mortgage can help adult children and their senior parents by providing them with the funds to allow them to age in place. Reverse mortgages provides seniors, ages 62 years and older to borrow against the equity in their home.  It is not required for the borrowers to make a monthly payment and there is no maturity date. There is no regulation on how the money could be spent – this could provide the funds to help support older adults to live in their home and to assist with any needs that they may need. Borrowers can use their reverse mortgage to pay for long-term health care, to repair or upgrade the home to suit their physical needs. Whatever the case is, the money can be beneficial to help support senior parents so that they may live out their golden years in their home.

Here are some things to consider before starting a discussion about obtaining a reverse mortgage for your parents

What are your plans with the home? Would you like to inherit the home?

• Plan to discuss with the family about what will be done with the house after your parents pass away. Typically, the loan will become due when the last borrower on title passes away, and if the heirs plan on keeping the home, it is important to plan ahead. If the heirs want to keep the home, they can pay the loan back with other assets or they can work with the bank to refinance the loan. If that is not possible, or you do not want to inherit the home, the heirs can also work with the bank to sell the home and whatever is left after the reverse mortgage loan is paid off can be returned to the heirs. Another option is for the heirs to walk away from the home and return it to the lender. Because this is a non-recourse loan, if the heirs choose to walk away from the property, they can do so without any liability or damage to their credit.

Are your parents planning on moving out of the house soon? Are they looking to moving in with you or to a new place?

• A reverse mortgage loan can be expensive, especially if used for the short term. It is not advisable for borrowers who plan on moving out of their home in a few short years to obtain a reverse mortgage. Also, once the last borrower leaves the home permanently, the loan will be come due. Borrowers who want to move to a new home to move closer to family or to better suit their needs can apply for a HECM for Purchase. It will allow them to buy a new house and apply for a reverse mortgage in one transaction.

Are they looking for an extra cash flow?

• A reverse mortgage loan is a great way for seniors to supplement their Social Security income and retirement funds. If you see that your parents may benefit with a little extra cash flow to help with paying bills, buying groceries or even a new car to get a round with – then a reverse mortgage might be a great idea for them. One of the biggest benefits of having a reverse mortgage is that they can choose however they want to spend it. Most borrowers usually use their reverse mortgage proceeds to help relieve themselves of some heavy financial obligations, or they use it for practical needs such as long-term health insurance or in-home care.

To learn more about how a reverse mortgage can benefit your parents, you can speak with an advisor at 1-888-808-8486.

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