Those who have children in or heading to college and retired parents are often called the “sandwich generation.” Wherever you search, all you’re able to see is extra expenses.
In the harsh economy over the last couple of years–with retirement savings and home values down, government benefit plans threatened and people living longer–most kids of seniors are worried about their parents having the ability to finance the rest of their lives, even if they’ve been diligent in regard to retirement planning.
Most of America’s elderly have their wealth within their home equity. If your parents are having trouble meeting their monthly expenses or paying for health costs, tapping into this equity might be the best answer. Reverse mortgages are financial products which permit them to do so.
Whether a reverse mortgage includes the right financial choice for your parents or not, it is an extremely personal decision and based on many factors. Within most instances, your parents would discuss the option with you prior to making a decision. You need to be ready to offer them the best advice. Below are a few questions you are more than likely to have answered.
What’s a reverse mortgage?
Reverse mortgages are loans available by reverse mortgage companies to homeowners who are over 62 years old. This type of mortgage allows them to convert a portion of the equity in their house into cash.
This loan is referred to as a reverse mortgage due to the traditional mortgage payback stream being reversed. Rather than making month-to-month payments to the lender (like a traditional mortgage), the lender will make payments to the borrower.
What do individuals use these mortgages for?
Reverse mortgages provided by reverse mortgage companies were conceived as a way to assist individuals near or in retirement and with limited income to utilize the funds they’ve placed into their house to pay debts off, cover basic month-to-month living costs or pay for health care. There isn’t any restriction on how the borrower might use the proceeds of the reverse mortgage.
Will the reverse mortgage raise my parents’ monthly costs?
No. A borrower isn’t required to repay the loan until the house is sold or otherwise vacated. As long as they reside in the house, they aren’t required to make any month-to-month payments toward the balance of the loan. However, they have to stay current on insurance and tax payments.
For more information on reverse mortgage companies, contact Longbridge Financial today.
