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#72 Reverse mortgage in a two-generational household


David Garrison
Home Equity Retirement Specialist
NMLS # 1595194
Serving the State of Indiana
p (317) 644-2595 c (765) 516-0130
e [email protected]

2169 East Rutland Lane, Martinsville, IN 46151
Corporate NMLS #1025894

February 24th, 2022

Five years ago, when your father fell ill, you moved back to Indiana from Tennessee to help your mother care for him; after his passing last year, you decided to stay. Your company has arranged for you to work remotely 75% of the time, with your own retirement planned for the fall of 2025. 

In the months before your dad’s health took that dramatic turn for the worse, your parents had been in the initial stages of exploring a reverse mortgage. Their hope was to spend the rest of their lives in that house. Each of your parents had a long term care insurance policy (in fact this insurance helped finance a lot of the at-home nursing costs).

Now that you have made the decision to stay and live with her, your mother intends to move forward with the reverse mortgage, using some of the equity to remodel the home, creating a “suite” for you with an office, a bedroom and bath.  Mom does not anticipate needing your help with household expenses other than groceries; with what your dad left her, she says she is fine financially.

If this has not already happened, it would be a good idea for you to visit with an estate planning attorney to update your mother’s power of attorney and other documents. You are just now learning about the reverse mortgage and have some concerns about what will happen with the home at the end of your mother’s life.

As your mother’s heir, you will be responsible for satisfying the debt after her death. What’s so reassuring is that if the value of the home for some reason should prove insufficient to satisfy the debt, any deficiency would be covered out of the FHA mortgage insurance fund. If you choose not to sell the home, (depending on the remaining equity and your being over age 62 at the time), you might choose to apply for a reverse mortgage of your own at the time as a way to pay off Mom’s reverse mortgage.

Sounds like your mom is moving ahead with her life, It also sounds like she’s lucky to have a daughter like you!