It is estimated that senior property owners are sitting on more equity than at any time in history – over $6 trillion. This has led to more seniors into considering a reverse mortgage.
If you’re thinking about getting a reverse mortgage, we strongly advise talking with your adult kids about your reasons. Here are some tips that can help guide this conversation:
- Come prepared – If you’re considering a reverse mortgage, you’re likely to have researched it thoroughly. But it’s one thing to know it yourself. It’s another to effectively explain it to your children. You may want to print out some helpful materials to assist you with your discussion. The Federal Trade Commission website and U.S. Department of Housing and Urban Development website provide excellent reverse mortgage information. You’re also encouraged invite your children to your reverse mortgage counseling session.
- Have a plan – Be ready to explain to your children why you’re considering a reverse mortgage and how you plan to use it. Are you planning to use it for medical expenses? Are you using it to live without monthly payments? Are you using it to supplement your retirement? Having these answers can put your children’s mind at ease about your decision.
- Explain that reverse mortgages are non-recourse – Reverse mortgages are considered “non-recourse loans,” which means that if the home is worth less than the loan balance, the lender cannot go after your family for the remainder of the loan.
- Discuss repaying the loan – Let your children know what you’ll need from them when the loan needs to be repaid – including how quickly the home will need to be sold, how they can apply for extensions, and what they should do with other assets.
Finally, it helps to let them know how the reverse mortgage may benefit them. For example, reverse mortgages may be used to cover some in-home medical care costs. These costs may have otherwise been funded by your adult kids.
Your family is going to be looking out for your well being, and taking out any type of loan – even one as safe as a reverse mortgage – can make them worried. So let your family know that you’ve thought about this decision extensively, and be willing to patiently discuss your reasons.
If you have further questions reverse mortgages, contact one of Open Mortgage’s friendly loan officers.