At some point, adult child caregivers may get involved as their aging parents make financial decisions. In many families, kids’ finances become intertwined with their parents. A reverse home mortgage can help elderly parents and the family they have come to depend on.

What Is a Reverse Mortgage?

Reverse loans allow people 62 and older to convert home equity into cash. Money borrowed can be used for any purpose, including paying off debt, medical bills, home improvements, etc. The funds can be distributed in a lump sum or installments. The amount that can be borrowed is based upon the age of the borrower, appraised home value, and current interest rates.

Involving Parents in the Process

The person applying for a reverse mortgage must have the name on the deed. Adult children cannot apply for a reverse mortgage for their parents, but can schedule a consultation with a reverse mortgage counselor if they are caregivers.

Parents should be involved in any decisions about applying for a reverse loan as long as they are mentally able to participate. They probably worked hard to buy a home and shouldn’t have to worry about their home equity being stripped away without their consent — even if their chidren mean well.

Reverse Mortgage Guidelines

A counselor can explain reverse mortgage guidelines and help determine how such a loan would help with household expenses. Counselors should be comfortable running the numbers to determine how much can be borrowed and with explaining reverse mortgages pros and cons. Reverse mortgage counselors also should be able to discuss alternatives to reverse mortgages.

Borrowing money through a reverse home mortgage is a big financial decision that should be planned carefully. It may be helpful for adult kids to find a knowledgeable estate planner to talk with about how a reverse loan can fit into their parents’ overall financial picture.

This entry was posted on Wednesday, February 10th, 2010 at 4:02 pm and is filed under Reverse Mortgage . You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.