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#143: Using a reverse mortgage to “power” the next generation


After retiring from the corporate world five years ago, you have continued your tradition of treating the kids and grandkids to a three day lakeside family reunion at a state park. Now, after recent storms and power outages wreaked havoc in the lives of one of your children’s families and, to a lesser degree, disrupted the lives of the two others, you’ve decided to offer both yourself and the kids a one-time additional “gift”.

After reading about solar panels, you investigated the costs and feasibility of having panels installed on the children’s homes. None of the three homes proved to be a good candidate (based on neighborhood, the type and state of the present roof, and the probable need to relocate over the next five to ten years). You are now thinking of paying for installing backup generators in each of the kids’ homes along with one for your own. While you are in a position to follow through on the plan, you’re reluctant to tap into your investment accounts during what you perceive is an uncertain outlook for the stock market.

Consider using your housing wealth to fund the costs of installing backup generators in each of the four homes. Your own home will serve as sole collateral for the loan, eliminating the need to tap your investment accounts. Whatever portion of your home equity has not been tapped will continue to be credited with growth at the same rate as the interest being charged on the loan, and there will be no need to make monthly mortgage payments.

A reverse mortgage on your home will provide the financial “back-up power” during future storms and power outages.