STEPPING UP TO PARENT THE SECOND TIME AROUND
It’s supposed to work the other way around, but your reality is that, in your early 70s, you have become “substitute parents” for your two granddaughters, one now 8, the other 13. While your ex-daughter-in-law, a traveling nurse, has always needed to work out of town a good portion of the time, your son had regular hours and had been able, even after the divorce, to manage with the help of a neighbor. Circumstances have changed in two terrible ways: Your daughter-in-law is on disability leave; your son was downsized and had been supporting himself with temporary job assignments, many of which require him to drive long distances.
In order to help supervise the two girls and keep their routines as stable as possible, you’ve offered to have them and their father move into your home. With your husband a retired educator, he is in a position to help supervise the girl’s studies; you can help drive them to their various activities, as well as to visits with their mother, allowing your son to focus on finding new, permanent employment. From a financial standpoint, your plan is to charge no “rent” until your son’s home is sold, and, in fact to help finance clothing, fees, etc. for the granddaughters until the situation “settles itself out”. Contributions to the college fund that your son and daughter-in law had created for the girls will simply need to be put on hold for the time being.
Amidst all the sorrow about your daughter-in-law’s condition and your worry about your son’s livelihood, you are trying to be realistic about your own financial situation. You had used a home equity line of credit to fund the big retirement remodel; you now have that loan about three quarters repaid. Your regular system of taking money out of both your retirement accounts as well as from your jointly owned investment account, along with your social security benefits, should, at least in the near term, suffice to cover the increased food and other household costs.
As an alternate approach to this challenging family situation, consider using your housing wealth in the form of a reverse mortgage line of credit. You would continue, of course, to take care of home maintenance costs, taxes, and insurance. Once your reverse mortgage has paid off your existing HELOC loan, (and the required monthly mortgage payments* have been eliminated) future withdrawals from the remaining equity would be nontaxable.** Any unused portion of your housing wealth would grow at the same rate of as that being charged on the borrowed funds.
With the family situation so subject to change (given your ex-daughter-in-law’s health issue and your son’s employment uncertainties), a reverse mortgage line of credit can help you help them, but only for as long as – and to the extent needed.
Your housing wealth can help you help your child- the second time around!
*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. **Please consult a tax advisor. 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.orgEqual Housing Lender