If you've found your own budget stretched to the brink by your elderly parent's need for an infusion of cash, you may be wondering whether there are any options (short of having your parent move in with you) to help improve his or her financial situation. The prospect of continuing to provide a stipend to ensure your parent can afford to pay the electricity bill or buy groceries can potentially cripple your own financial future, but allowing the person who raised you to go without simply isn't an option for most. Read on to learn more about how a reverse mortgage may be able to provide your parent with a monthly income while allowing him or her to continue living independently at home.
What financial assistance does a reverse mortgage offer?
A reverse mortgage is a type of home equity loan, but instead of having a limited term (and requiring payback of any funds borrowed), a reverse mortgage vests legal title to the home in the lender in exchange for a monthly payment for the rest of your parent's life (or time in the home). This unique structure combines the benefits of an annuity with the ability to tap into one's home equity, ensuring your parent can take advantage of the equity built over the years without having to sell his or her home.
If your parent goes into a nursing home or assisted living, the reverse mortgage will close and the bank will then own the house.
Is this a good option for your parent?
A reverse mortgage can be ideal for seniors who don't have much in the way of liquid savings but who have substantial home equity or who live in a part of the country where housing prices have significantly risen over the past few years. By tapping home equity through a reverse mortgage, your parent will be able to take full advantage of all available assets.
Reverse mortgages can also be a good option for those who plan to remain in their home for the rest of their life or who use this home as a "home base" for visiting children, grandchildren, or other relatives. Using retirement funds to pay property taxes and maintain a home can leave little left over for other expenses, so taking out a reverse mortgage can ensure a constant stream of income without the hassles and payment obligations that can come from refinancing.
For more information, talk with a company like Province Mortgage Associates Inc.
Share6 August 2017
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