Time to change the definition of a house.
Reverse mortgage brokers run into the same issue with families over and over. Its the issue of the, “family home”. No matter where your parents live, no matter how long they have lived there, and no matter what shape that house is in, it is “the family home”.
The family sees a reverse mortgage as an attack on the family home. They worry that signing a reverse mortgage means that the family loses the home. It is simply not true.
Time to change the way you think about your parents house. Your parents house is an asset that can work for them the rest of their life. Your parents house is not going to be the same once they pass away. It will just be another asset that you will be selling to settle the estate.
A reverse mortgage is set up to help them while they are still able to live a better life, and to help you once you have to manage the estate. Here are some things you may NOT know about a reverse mortgage.
1) You do NOT lose the home when you get a reverse mortgage.
2) Over a period of time, a reverse mortgage becomes the cheapest loan instrument on the market. There are up front costs, but the interest rate is much lower than any other loan.
3) The estate has an entire year to settle the debt on the home or decide to sell the home, without any payments.
4) This is a government entitlement for seniors. It guarantees that they get every dollar that they are entitled to, and secures their home against a foreclosure that can happen with a regular equity loan.
5) A reverse mortgage can be paid back, with as much or as little as you want to pay, whenever you want to pay, without any penalties. If you do not want to pay any payments on the loan for the rest of your life, thats OK too.
The truth is that the majority of the time the home is sold by the estate and the cash is split up among the heirs. If your parents home has been in the family for hundreds of years, and it the most important asset of the family, then maybe you should make sure no loans are ever taken out on that property. But if your parents home is a new home they just bought, an older home that none of the kids is planning on moving into when they pass, or just an average suburban home, you need to let them get a reverse mortgage. It will make your life as a executor of the estate much much easier to manage. It will also put money into your parents pocket and give them a better life.
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