Discuss Reverse Mortgage with Heirs
March 8th, 2010
- Talk with Your Kids about Reverse Mortgages
- Addressing concerns of reverse mortgage heirs
- Tips for reverse mortgage heirs
- Reverse Mortgages and Life Insurance
- Reverse Mortgage Heirs
Getting a reverse mortgage is one way to supplement your retirement income. Before borrowing money it’s a good idea to talk about the reverse mortgage with your heirs.
What Is a Reverse Mortgage?
If you plan to leave your home to your kids, it’s important to discuss how a reverse mortgage would impact their inheritance. First, make sure they understand how a reverse mortgage works.
A reverse home mortgage allows you to tap into your home equity while you are still able to use the money. Reverse loan proceeds can be used for any purpose, including paying off debt, medical costs, or home repairs. The money does not have to be repaid until you move or die.
What about the Inheritance?
More than likely your kids may be concerned about what happens to your home after you die. Your estate has up to 12 months to pay off the reverse loan if your kids want to keep the house. If they don’t want the property, they can choose to sell the house to repay the balance. Heirs would be able to keep any equity remaining in the property once the reverse lmortgage is paid off.
Reverse Mortgages: Pros and Cons
While a reverse mortgage can give a boost to your finances, there are pros and cons to borrowing money. Yes, a reverse loan can give you additional cash to live more comfortably. However, if you don’t budget this money carefully, you could run out of money sooner than you anticipate. Also, reverse loans have more fees than traditional mortgages, so it’s important to understand what you are paying for.
Talk with a reverse mortgage counselor approved by the Department of Housing and Urban Development (HUD) to get all the facts about borrowing money. You also can compare reverse mortgage quotes here.