If My Mom Or Dad Are Thinking About A Reverse Mortgage What Do I Need To Know?
Can you or your siblings afford to help your parents with their living expenses?
If like most you cannot, a Reverse Mortgage is a solution to inadequate retirement funds.
- It can enable your parents to live independently
- Eliminate dependency on family members for support
- Provide a renewed sense of dignity
Are you or your siblings worried about inheriting the family home or it's equity?
If you are, just remember:
- if you choose to sell it, your parents’ home may have appreciated in value which could provide equity left that the heirs get to keep when the home is sold.
- if you want to keep it, you’ll have the option of paying off the balance of the loan to retain ownership
How do mom and dad feel about in-home medical care or assisted living?
Age related health issues force seniors and their children to make tough choices everyday.
- Should they move into a nursing or assisted living facility
- Or Receive in-home care and remain living in their home
To help support their wishes it’s best to have that conversation with them.
Need to talk about it? We are standing by, give us a call 650 444-4444
Can the bank take their home?
Yes, but ONLY IF a borrower fails to meet the loan guidelines, such as;
- Staying current on property taxes
- Maintaining homeowner’s insurance
- Keeping the home in good repair
Failure to do these things could result in the loan being called due and payable.
Otherwise, No the bank will not foreclose and mom and dad will continue to own their home and retain title throughout the life of the reverse mortgage.
What happens to their house if they move into a senior care facility?
A reverse mortgage becomes due and payable when the last borrower moves out of his or her home permanently. This includes
- moving into a senior care facility
- selling the home
- moving in with the children
- last borrower passing away
What happens to any equity left if we sell the house?
Any remaining equity left belongs to the owners or heirs. Whether your parents or their heirs sell the home and use the proceeds to pay off the reverse mortgage, any amount left that is more than the loan balance is retained by the seller.
Example: Sell the home for 500K with a 350K Reverse Mortgage Loan Balance the owners or heirs would keep the balance of 150k after the 350k loan balance is paid off.
What are the risks associated with a Reverse Mortgage?
While the income from this loan won’t generally affect Social Security or Medicare benefits it can have an affect on other federal or state assistance or medical programs, which is why we advise borrower(s) contact their lender, legal/financial advisor, or independent counseling agency. The greatest risk comes from failure to comply with loan terms which could result in foreclosure.
Are there limitations on how they spend their money?
Mom and dad can spend the money however they see fit.
- payoff medical bills
- pay credit card debt
- home improvements
- visit family
- fulfill their bucket list
What are the fees?
Your parents lender is required, by the Federal Reserve Board, to provide a “TALC” disclosure (Total Annual Loan Cost). The TALC displays the total transaction costs over the projected life of the loan, which will allow you and your parents to see a list of all the costs associated with the loan.