Should Mom and Dad Get a Reverse Mortgage? What Adult Children Should Know
You might not be ready to explore the benefits of a reverse mortgage loan, but that doesn’t mean it’s not a valuable tool that can benefit your whole family now.
If you’re part of the “Sandwich Generation” — simultaneously raising a family, funding your children’s education and caring for aging parents — you may be carrying the financial strain of having to worry about your own costs while helping parents plan for retirement.
One source of relief? Your older loved ones’ home equity. According to the National Reverse Mortgage Lenders Association (NRMLA), if your parents are struggling to meet their month-to-month expenses or to pay for additional health expenses, a reverse mortgage may be the best solution for all of you.
An untapped source for retirement funds?
A vast majority of older Americans have their wealth tied up in their home equity. Homeowners age 62 and older collectively own $9.2 trillion in equity. It’s generally the largest asset for most households, yet it’s typically underutilized for retirement. Leveraging those funds, as your parents continue to age comfortably at home, can be a smart financial planning option for them while relieving the burden on you.
How much money can my parents expect?
The amount of funds depends on the age of the youngest borrower, home value, interest rate and upfront costs. The proceeds may be received as lump sum, monthly payments or a line of credit that’s available if and when they need. *They can also use any combination of these options, such as taking part of the funds as a lump sum and keeping the rest in a line of credit.
What are their responsibilities?
Your parents have certain mortgage obligations to keep their loan in good standing:
- The home must remain their principal residence.
- They must maintain the home and keep up with general repairs.
What about my inheritance?
While having an inheritance may be nice, like most adult children you’d prefer your parents (or other older family members) live safely and comfortably without having to worry about finances. According to NRMLA research, there is an emerging intergenerational consensus that aging parents should spend whatever they have to live as well as they can for as long as they can.
Plus, with a reverse mortgage, borrowers are less likely to draw upon investment portfolios for financial support, allowing them to potentially grow and even serve as a separate financial legacy for heirs.
Making an informed decision
Reverse mortgages are not for every borrower. Reach out to Reverse Mortgage Funding (RMF) to learn if it’s the right tool for your loved ones. Call us today at (888) 277-1567 to set up a convenient appointment in your area.
This content is sponsored by RMF, one of the nation’s leading reverse mortgage lenders. We are dedicated to helping older Americans retire more freely, in the comfort of their own homes. As a result of our commitment to providing an extraordinary and positive customer experience, we have earned a 98% customer satisfaction rating; a 4.7-star / Excellent score on Trustpilot; 4.8 out of 5 stars on LendingTree; and an A+ rating with the Better Business Bureau. Call 888-277-1567 to speak with a licensed reverse mortgage specialist to learn about our retirement financing products and solutions.
* Borrowers who elect a fixed rate loan will receive a single disbursement lump sum payment. Other payment options are available only for adjustable rate mortgages. In certain states, RMF’s Equity Elite loan provides a fixed-rate term payment option