Reverse Mortgage for Parents
What to expect—and how to make sure your parents are protected.
At Crown Reverse Mortgage Financial, we guarantee that we’ll treat your parents with respect and do the right thing.
This includes telling your parents if a reverse mortgage is NOT a good option for them. Not all lenders make that promise.
“A big thank you to Brian! I first reached out to him about registering my account online. I had some problems with the process. Well, a few days later the problem was solved. Brian helped me access my loan information and request a draw. What a relief! The whole process took less than a week. Seeing someone actually follow through is great. Truly excellent service.”
"What do my parents need to know about a reverse mortgage?"
Are your parents are age 62 or older, and do they own their home?
If the answer is yes, they can use a reverse mortgage to access their home equity and get needed cash.
This requires no monthly mortgage payments.
If they have an existing mortgage, the reverse mortgage will first be used to pay that off.
And without that monthly payment, they’ll have more cash each month to spend as they wish.
- A reverse mortgage can provide funds to help your parents live more comfortably
- No monthly mortgage payments are required
- Your parents—not the bank—own their home
- They’ll have to pay property taxes, homeowners insurance, and home maintenance as always
- The loan comes due when they no longer live in the home, for whatever reason
- Often, the home is sold to repay the loan (you can never owe more than the home is worth)
- Any leftover equity goes to the heirs
The most popular reverse mortgage is a Home Equity Conversion Mortgage (HECM). It’s insured by the Federal Housing Administration (FHA), which provides protection for the borrowers. Here are important things to discuss with your parents if they consider a reverse mortgage:
“How much money can my parents get?”
It varies, based on the age of the youngest borrower, current interest rates, how much home equity they have.
Here are 3 other factors to consider:
- The home’s value
- The sale price
- The maximum lending limit (whichever is lowest)
Try our quick calculator now to get a free quote.
Counseling is required to help protect them.
The federal government requires everyone considering a reverse mortgage to have a counseling session.
The session includes an approved Department of Housing and Urban Development (HUD) agency. The agency ensures that you fully understand the terms of the loan, and that it’s a solution that meets your needs.
The HUD-approved counselor can explain how reverse mortgages work, and review your parents’ options with them. It allows your parents to ask the counselor any questions about reverse mortgages, so they can make an informed decision about whether it’s right for them.
“How and when does the loan have to be repaid?”
Reverse mortgages come due when all the borrowers no longer live in the home. That could mean that the parents moved, had to go into assisted living (or a nursing home), or passed away.
Most often, the home is sold and the proceeds are used to repay the lender. If there’s any money left over, it goes to the estate.
It’s important to remember the following: If one parent passes away or moves out, and the other is not on the home’s title, or doesn’t meet the age requirement (62 and older), the reverse mortgage will not automatically transfer to them. In this case, the loan will have to be repaid.
“What about adult kids who live with their parents?”
The situation described above also applies to other residents in the home.
This includes the adult children of the borrowers.
What if the parents leave the home and the loan can’t be repaid through other fund sources?
In that scenario, the home would have to be sold. Any adult children or other residents would have to find another place to live.
How will my parents’ reverse mortgage affect me?
If your parents leave their house to you as an inheritance, you’ll be responsible for repaying the loan—again, most often this can be done by simply selling the home and using the proceeds.
This way, even if the loan balance exceeds the value of the home, you won’t have to cover the difference. That’s one of the protections supplied by government-insured reverse mortgages.
If you don’t want to sell the home, you could pay off the loan yourself, using other sources of funds. But it’s important to remember that in this situation, the full amount of the loan has to be repaid—even if the amount owed is more than the value of the house.
Since your parents would be borrowing money against the value of the house, with accruing loan interest and mortgage insurance payments, the loan amount will increase over time.
That said, the home may appreciate in value. It’s possible that there may be money left over from the sale of the house. This money would go you as the heir, once the loan is paid.
But it’s important to consider that while your parents having a reverse mortgage could mean a reduced inheritance for you. It can also allow them to enjoy a more comfortable retirement that helps them stay in their home longer. That’s what makes it a helpful financial solution for many older adults such as yourself.
Still have questions about reverse mortgages? Contact the helpful experts at Crown Reverse Mortgage today to see if you qualify (it's free to call).
The quote was honest and fair, matched and/or exceeded other offers. Service by introducing broker was excellent as well as communication with him. Closing department very slow, as well as communication. Make sure all your quote numbers match with your “GFE” (good faith estimate). I had no problem with Crown Reverse Mortgage but other companies tried to play games with the numbers and loan credits. The “GFE” is what the closing is based on, check dates on it carefully, and talk directly to closing agent. Also, no real work is done on your loan until they receive the appraisal. This is true of most companies as they want to be sure the value of your property is correct. Spruce up and do appraisal ASAP.