HOME EQUITY HELPS DAD AND DAUGHTER HELP EACH OTHER
After your wife’s passing more than a decade ago, you made the decision (you were 71 at the time) to spend your remaining years in the familiar surroundings of your home. While all your children stay in close touch, your sons and their families live quite far away; your daughter, a healthcare worker, has always been nearby. The oldest of your three children, divorced these many years, your daughter has struggled financially. Yet, among the siblings, she’s proven the most devoted to your welfare.
Over the past couple of years, your health has been on somewhat of a downward path, and, while you’ve been able to remain independent, it has become more challenging to manage home maintenance and upkeep. Driving is still possible, but it’s become evident that you’re going to need some help, at least a couple of days each week, to relieve your daughter, who has been helping with the shopping and food preparation.
Through church, you attended a talk about reverse mortgages. You’ve been considering that idea for yourself, given that your home is mortgage-free and, judging from a recent sale in the neighborhood, has grown substantially in value over the years. Tapping into that value, you realize, might be the only way to afford home health care.
Meanwhile, though, your daughter has suggested moving in with you, which would save her having to pay apartment rent. Your home is certainly large enough, she points out, to afford the privacy she’d need. With her help, she adds, you would not be burdened with paying for expensive home healthcare.
While, on the face of things, the idea of having your daughter right there is very appealing, you want to be sure you’re not putting your own needs ahead of her future security. She would need to be guaranteed the right to remain in your home in the event your health deteriorates to the point of having to move to a hospital of nursing home. Does a reverse mortgage still fit this situation, you’re wondering?
If your daughter is 62 or older, she can become a co-borrower on a HECM reverse mortgage, which would guarantee her the right to remain living in the home if you were not longer able to stay there (either because you’ve had to go to a medical facility or you’ve passed). However, because the reverse mortgage loan calculation will be based on the age of the youngest borrower, the available loan amount is going to be significantly reduced. If, on the other hand, you decide not to have her as a co-borrower on the reverse mortgage loan, when the time comes that you have not been able to occupy the home for more than a year, your daughter would need to pay off the balance in order to remain in the home.
According to Psychology Today, nearly one in eight adults in the U.S. is caring for an aging parent, and “family caregiving is increasingly recognized as a normal phase of the parent/child life cycle.” Finding and paying for home health care, the authors note, is a real challenge. With your daughter a healthcare professional (and willing to live in your home), it certainly sounds like an arrangement worthy of serious consideration (with both an estate planning attorney and a reverse mortgage professional).
With reverse mortgage funding, your home equity can help you and your daughter help each other.
https://mutualreverse.com/david-garrison
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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