Addressing concerns of reverse mortgage heirs
March 14th, 2011
- Reverse mortgage FAQ
- Talk with Your Kids about Reverse Mortgages
- Discuss Reverse Mortgage with Heirs
- Reverse Mortgages and Life Insurance
- The Sandwich Generation, reverse mortgages, and estate planning
Are your kids against you getting a reverse mortgage? Deciding to draw down the equity in your home with a reverse loan can cause a lot of concern among your adult kids. Although the decision to apply for a Home Equity Conversion Mortgage (HECM) is ultimately yours, that doesn’t mean your kids won’t have a lot to say about it. Here are points to discuss with your kids about getting a reverse loan.
- Who pays back the loan after you die? For the most part, reverse mortgage heirs have not been liable for paying back the loan. The loan usually gets paid when the mortgage lender sells it, and any remaining equity goes to heirs. But recently, AARP flied a lawsuit against the Department of Housing and Urban Development over changes to the HECM program that has led to reverse mortgage heirs facing eviction and foreclosure if they don’t repay reverse loans, even if the payoff is higher than their home’s value.
- What do you plan to do with all that money? If you are of sound mind and can make your own financial decisions, that really isn’t anyone else’s’ business. However, if you rely on your kids for some financial support or other types of assistance, it seems like a legitimate question for them to ask.
- Where are you getting your information about reverse loans? It may make sense to have your son or daughter attend the mandatory reverse mortgage counseling session. The counselor will review reverse mortgage guidelines and give you alternatives to borrowing money, such as programs that may be available in your community.
Reverse mortgage discussion
Some older homeowners have had success with reverse loans, while others find that borrowing money is not the right choice. It’s never a bad idea to discuss major financial decisions with trusted heirs who can help you make the right choice. But in the end whether or not to apply for a reverse mortgage should be about helping your financial situation, not making other people happy.