Should My Parents Get a Reverse Mortgage
If your parents are considering getting a reverse mortgage, there are some things you should know about how this will affect their home and your estate. Learn what a reverse mortgage is, how it works and how a reverse mortgage may affect your inheritance and your parent’s estate.
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Maria A. Gaitan, Director of Housing Counseling & Community Outreach: Thanks for tuning in. If your parents are considering getting a reverse mortgage, this video will explain how this low-risk lending tool will affect their estate and the family’s inheritance.
First, the money received from a reverse mortgage is tax-free. Also, a reverse mortgage is repaid when the borrower dies, permanently moves from the residence or the property is sold. Most importantly, a reverse mortgage is a non-recourse loan, which means that your parent’s estate will not have to pay back any amounts owed that are in excess of the residual value of the home.
However, if your parents’ heirs do wish to keep the home, it is important to note that they don’t have to pay more than the full loan balance or 95% of the home’s appraised value, whichever one is less.
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Still have questions about reverse mortgages? Talk to a HUD-certified housing counselor for more information.