Mom and Son, Reverse Mortgage Co-Borrowers

It’s a ‘moment’

…You pause and think about that lifespan and what it experienced in the last almost 100 years of history. Lily’s appearance looked like 98 too I guess. She had deep character lines on her face and a strained shuffle behind her walker. But her eyes were different from the rest of her body. They shined with an intensity that matched her spoken words. Lily knew she needed financial security for herself and her caregiver son.

People of advanced years, including my mother, say that even though the body gets old you are still the ‘same you’ inside and I believe it. Lily knew what she wanted and was not shy in communicating it. She wanted to stay in her home as long as possible. She wanted her son Richard and his longtime girlfriend to care for her there until they couldn’t. Ultimately, she wanted Richard to have the home when she no longer roamed the earth, she said.

Referred to us by a Financial Advisor:

Lily was referred to us by her Financial Advisor because he knew from Kim that an FHA Reverse Mortgage could be completed for a Mother & Son borrower, as long as the adult child was 62 years of age minimum.

The financial planner had seen the needs changing and was confident that a reverse mortgage was the best solution to secure money for Lily’s long-term care as well as an appropriate tool to maintain financial stability and security for Richard in the family home. He was right.

The Financial Preparation:

Richard and his long-time girlfriend moved back to the family home to care for Lily over ten years ago. He’s invested a significant amount of his time and life now, having given up a business in another city so he could be available for mom’s care. He started taking Social Security himself (69 when he moved back home) and both he and his girlfriend contributed to the household, however, there was not enough for other in-home care and Lily’s needs were 24/7. There was never a break.

Their bank suggested they take out a Home Equity Line of Credit to pay for extra care. Simple the bank said. But Richard knew there was a flaw in that thinking. You are required to make a monthly minimum payment on the bank’s HELOC and the banker didn’t seem to remember that monthly cash-flow was already tight!

The Solution:

After reviewing Reverse Mortgage loan options with Kim and with the blessing of their estate attorney, Kim and Cheryl proceeded with the loan application, appraisal and closing of the loan. The estate was in a trust so a minor amendment was also required and easily handled. Mother Lily and Son Richard were both beneficiaries of the trust, and both entitled to the benefits of the reverse mortgage loan. The reverse allowed them to access a portion of their home equity as a line of credit. When one of them passed away or no longer lived in the home as their primary residence, the other borrower would STILL HAVE THE PROTECTIONS and privileges of the loan.

Lily did need more care and spent her remaining weeks in a care home not too far from the family home. Draws on the reverse mortgage line of credit funds paid for that 24/7 care and Richard and his girlfriend could go back to being a son and special person in Lily’s life, instead of being the worn-out caregivers. Lily passed away just shy of her 100 birthday.

The Reverse Mortgage Bonus:

The structure of the FHA Reverse Mortgage loan can accommodate a wide variety of family dynamics. Kim and Cheryl crafted a scenario that used the home equity for Lily’s care and provides Richard with benefits as well. He still owns the home and is assured a place to live even though significant funds were used to pay for Lilys care. Richard is not required to make a monthly payment on the outstanding balance of the loan, and there is still additional line of credit funds that he can use as he needs to. Richard is responsible for property taxes and homeowners’ insurance and maintaining the property.

What to Do Next:

Growing older can get complicated and we want to protect our families. If you have a challenge in your home financing, give Kim a call. She can help see what options will make the most sense, and that may not be a Reverse Mortgage if it is not a good fit. She will let you know either way.