Talking to Your Children About a Reverse Mortgage

The subject of reverse mortgages can be a difficult one to discuss with family. Because of the potential affect on your estate, most financial advisors and reverse mortgage experts recommend that you include your family in the decision although this is certainly not required. Many individuals simply prefer that their finances stay private and choose to not share this matter with anyone.

If you do decide to first discuss your decision with your family, Grindstone United offers the following tips for ensuring the conversation is well received.

1. Be Upfront – Tell your children the facts about reverse mortgages. The tradeoff is simple. The homeowners receive an improved standard of living in their “golden” years at the expense of their estate.
2. Be Realistic - More than likely, all remaining equity in the home will be used to pay off the loan balance leaving little or no equity for the survivors.
3. Be Understanding – Your loved ones may not react in the way you initially expect. Keep in mind that they are more than likely only looking out for what they perceive to be your best interest.
4. Educate them on the common misconceptions – Many people wrongly believe that reverse mortgages are unethical (they are not), expensive (while upfront costs are high, the interest rate is low), and dangerous (your exposure is limited to the value of your house).
5. Have Them Meet Your Advisors – Request a meeting or conference call with your reverse mortgage lender and financial advisor. Sometimes it is comforting for family to know that you are working with honest, competent advisors.

What comes as a surprise to many reverse mortgage consumers is that their children and other heirs actually support the decision. They see it as a great relief for their loved one, finally allowing them peace of mind and enjoyment in their retirement. It often brings them some relief knowing that their loved one will be financially sound without relying on anyone else for support.

For more information on discussing reverse mortgages with loved ones, call Grindstone United at 866-508-HECM.