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#110 Benefiting two generations with a reverse mortgage


November 15th, 2022

Your 85-year old widowed mother is becoming less and less able to manage her large home in central Indiana. With you hours away in eastern Illinois, your plan had been to help Mom move into a retirement community. Mom, though, is adamant that she wants to stay at home for the rest of her life, bequeathing the house to you after she passes. Although there is only a very small mortgage remaining, Mom could not afford to keep up the house and also pay into a retirement community. In prior conversations, she has been amenable to hiring part time in-home healthcare assistance.

As fate would have it, your current employer is expanding eastward, and a position has become available less than an hour’s drive from your mother; you have an excellent chance at being appointed to take over that territory. Now age 59, your plan is to continue working full time for the next eight years, at which time you will qualify for full social security benefits.  In terms of moving, you have been renting an apartment, so there will be no problem relocating except for the costs of early termination of your present lease. While until your job transfer has been approved, you have not wanted to discuss any new arrangements with your mother, one possibility you’ve considered is moving in with her and paying rent, which would help with her expenses along with your own. 

Given that a) your mother intends to remain in her home for the rest of her life, b) you are the intended sole heir to the home someday, and c) you would consider living in the home yourself starting now, a HECM Reverse Mortgage on the property might be a great way to satisfy all those goals. 

As a senior homeowner, your mother could use a reverse mortgage to tap into the equity built up over the years, owing no monthly mortgage payments.  She’d still be responsible for paying property taxes, insurance, and maintenance costs, but the repayment of the loan would be deferred until her death (or until she were forced to move out of the home). With the loan set up as a line of credit, the equity could be used to pay for Mom’s in-home nursing assistance as needed.

You, as a non-co-borrower on the reverse mortgage, could stay in the home for as long as Mom is still living there. If she were later forced to relocate to a facility (or upon her death), you would need to repay the loan in order to remain in the home. However, you will never have to pay more than the remaining balance or 95% of the home’s appraised value, whichever is less.

Of course, once your job situation has been made more  clear, it would be a good idea for you and Mom to visit with an estate planning attorney to make sure both your needs and hers are being best served.

It could be that “fate would have it” for you to “go home” again, using a reverse home mortgage!

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