The son of a senior homeowner asked me recently if his parents were good candidates for a reverse mortgage? These are the questions I asked him.
- How long do your parents plan to live in their home? If at least 18-24 months or more, then it may make sense as it may take that long to recoup the cost of the loan.
- Does this home fit them in this stage of life? i.e. can they still navigate the stairs, maintain the home, pay for the home expenses like homeowners insurance, property taxes, etc.
- What resources are available to them in their golden years? Including income, assets, investments, Social Security, Annuities, etc.
- Have your parents been responsible with the resources they have been entrusted with over the years? The last thing we want to do is open up access to tens of thousands of dollars if they haven’t managed their money wisely up to now.
- How is their mental health? Again, we need to ensure they are making a good decision and are of sound mind to do so.
- Are your parents concerned about leaving less of an inheritance to their heirs? The reality is there will be less equity to pass on to heirs if they get a reverse mortgage.
- What type of home do your parents currently live in? If a single-family home, FHA approved Condo, Townhome, Patio Home, or a 2-4 unit complex they live in, these all qualify.
- If one passes on, will the other want to remain in the home?
- Can the survivor live on one income with the current budget?
- Will a reverse mortgage position your parents so they can remain at home, maintain their independence, retain title as an owner, increase their cash flow, or decrease their expenses, and position them better financially?
These questions are all good to consider for anyone considering a reverse mortgage.