Most older homeowners have a lot of equity in their homes. If you have adult children, you may find they are starting to get more involved in your financial life planning responsibilities. Discussing a reverse mortgage can be tricky for some parents who do not have children that understand how it works. We recommend using these tips to make the discussion easier as you explain to your children what a reverse mortgage is:
- Be prepared. If you are planning to have a discussion with your kids, bring all the paperwork with you. We can offer some materials to hand out to your children to help them understand how a reverse mortgage works if they are concerned. You can invite your children to counseling sessions at Fairway Independent Mortgage to help them understand, and have their questions answered by a professional.
- Discuss the use of funds. Children are often concerned about their parents financial resources when they age as they want to ensure there will be money available for medical expenses and other needs. Talk to your children about the reverse mortgage benefits and what you plan to use the money for. If you are using it for medical expenses, a trip, vehicles, or other things, it helps to keep your kids in the loop to ease their concerns.
- Non-recourse Loan. When talking to your kids, make sure you tell them that a reverse mortgage is a non-recourse loan. What this means is that if the home ends up being less than the money borrowed, the lender will not be able to come after family members for the remainder of the loan.
- Payment options. Discuss how you plan to repay the loan, and how long it will take to repay the loan. If needed, talk to your children about applying for an extension on the loan in the event of your passing.
A reverse mortgage holds several key benefits for seniors, including the ability to pay for medical care costs. Keep in mind that your children are looking out for your wellbeing when you are discussing your financial situation.
*This advertisement does not constitute financial advice. Please consult a financial advisor regarding your specific situation.