2169 East Rutland Lane, Martinsville, IN 46151
Corporate NMLS #1025894
Before your wife of almost fifty years passed in 2020, the two of you had planned to remain in the home you’d occupied for almost four decades. Together, you had begun exploring the possibility of taking out a reverse mortgage, but the process had to be sidelined while you dealt with hospitalizations and treatments. Your intention continues to be occupying the residence for the remainder of your own life.
While right now you are well able to financially support your own lifestyle, you like the idea of having a reliable and readily available cache of money from which to draw in the event of unexpected opportunities or needs. Both your children have homes of their own, but your one big hesitation about the reverse mortgage is that you don’t want to leave any debt or hassle for them in settling your affairs.
When a reverse mortgage borrower dies, the lender will typically explain to the estate representative different options for paying off the loan. If the heirs to your home are your two children, they will have the choice of: selling the property to pay off the reverse mortgage balance, or to pay off the loan with a new mortgage.
One possible way to avoid passing on any debt obligation to your heirs is buying a whole life insurance policy. Your heirs could use those insurance proceeds to pay off any balance remaining on the reverse mortgage without needing to sell the property should they make the decision to continue to own it.
Your housing wealth would thus have come full circle, there to fund your own unexpected opportunities or needs, yet preserving your children’s power of choice about their childhood home.
*Not intended as financial planning advice. Please consult a financial advisor.