REVERSE MORTGAGE CAN BE GRANDPARENTAL GUARDRAIL
“It might be time to stop supporting your adult children,” the Economy section of your Indianapolis Star advised, with the part about grandparents’ own financial security being put at risk really “hitting home” to you. “There’s nothing wrong with providing financial support to adult children or grandchildren,” a Credit Karma consumer financial advocate is quoted as saying, “but if it begins to have a negative effect on your own finances, it’s probably time to set some guardrails.”
All well and good, but when illness and job insecurity have rendered an adult child unable to provide for his own children’s needs, the two of you have been stepping up to help. Having only recently paid off a second mortgage you’d taken out to do an “aging in place” home redesign, you have now reached the point of increasing your withdrawals from your own investment accounts. Meanwhile, along with every else, you’ve been notified of a sharp increase in your prescription drug costs. Despite this “negative effect on your own finances, you cannot imagine standing by while your granddaughter is forced to drop out of college or allowing your grandson to halt his efforts to enroll next fall. Your daughter-in-law is working two jobs, while your son continues to have escalating medical debt as he recovers from a severe health setback.
Given your intention to “age in place”, you might consider using your housing wealth as the “guardrail” for your own financial security. You would begin by applying for a HECM reverse mortgage, set up as a “standby line of credit”. Unlike either your original mortgage or that second mortgage you just paid off, there are no mandatory monthly mortgage payments* due on a reverse mortgage (the house itself is the collateral for the non-recourse loan). You could draw on your equity as needed to help your son and grandchildren, even to help with your own medical costs. Meanwhile, the unused portion of your home equity would be credited with growth at the same rate of interest as that being charged on the borrowed funds.
It does not sound as if the time has come for you to withhold support from your son and his family. On the other hand, turning your housing wealth into a “grandparental guardrail” might be a path well worth exploring.
https://mutualreverse.com/david-garrison
*Borrower must occupy home as primary residence and remain current on property taxes, homeowner’s insurance, the costs of home maintenance, and any HOA fees. David Garrison, NMLS ID 1595194. Mutual of Omaha Mortgage, Inc. dba Mutual of Omaha Reverse Mortgage, NMLS ID 1025894. 3131 Camino Del Rio N 1100, San Diego, CA 92108. Indiana-DFI Mortgage Lending License 43321. Michigan 1st Mortgage Broker/Lender/Servicer Registrant FR0022702. These materials are not from HUD or FHA and the document was not approved by HUD, FHA or any Government Agency. Subject to credit approval. For licensing information, go to: www.nmlsconsumeraccess.org
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