How do you know if a reverse mortgage is right for your parents?by Tim Manni
Jane Blume’s story is one many middle-aged Americans can relate to: Her aging parent was beginning to run out of money. The money her mother spent her whole life saving was quickly dwindling. When Social Security was no longer enough to help Blume’s mother cover her bills, maintain her home and pay for her every-day expenses, she suggested her mom apply for a reverse mortgage.
“Older Americans born in the pre-war era have a stigma about reverse mortgages,” says Eric Declercq, national retail leader for reverse mortgages at MetLife. “They [don't] want to strip their equity.”
It’s true, many older Americans have a lot of fears and questions surrounding a mortgage product that many feel will leave their loved ones with a pile of debt. While it’s true, a reverse mortgage isn’t for everyone, and it is possible to outlive the proceeds, children need to know how to approach and discuss at least the idea of applying for a reverse mortgage and dispelling the notion of leaving them with only a pile of debt.
Suspect money troubles? Start the conversation
Talking about a parent’s finances is never easy, especially if you’re not sure how big the problem is. There are usually red flags that alert you to trouble ahead. For instance:
- You may know that your parent has limited assets.
- You may be aware that your parent is reliant on Social Security.
- Your parent may be racking up significant healthcare costs.
These are all tip-offs that open the door to financial discussions.
“Find the right time to talk to a parent,” says Declercq. “Look at the quality of their lives. How are they living? Are their cupboards full? What’s their health like?”
That’s the entry point for brainstorming alternatives, adds Eric Tyson, co-author of “Mortgages for Dummies.” The first question for a parent is: Do you want to keep living in your own home? “If so, then take an inventory of their financial situation,” says Tyson. “There may be assets someplace else, such as real estate that isn’t generating a lot of money.”
How can I help my parent(s) research a reverse mortgage?
There are several things children can do to help their parent(s) research a reverse mortgage. Click here to find out more.
For more on reverse mortgages, be sure to read:
“Top Ten Things To Know If You’re Interested In A Reverse Mortgage”
“Home Equity Loan or Reverse Mortgage: Which Is Right for You?”
“Reverse Mortgages: Get the Facts Before Cashing In On Your Home’s Equity“