Reverse Mortgages Can Reverse your Luck!

Looking after an aging parent in their own home often seems to be a good solution to an awkward problem. However, depending on the type of financing on the property in question, things could get difficult.

It is certainly a solution that needs to be thoroughly investigated before it is set into place. Many parents have switched their once-paid-for properties to a reverse mortgage and this could complicate your joint lives.

A reverse mortgage is not really a mortgage at all, as there is no monthly payment to be made. It is more like a line of credit with the home used as collateral against the loan.

Credit payments can be made at any time to reduce the amount borrowed. Many older people use a reverse mortgage as a way of spending some of the capital from the value of their home, while leaving some capital in the estate for the children to inherit.

It seems a sensible and a viable proposition to live in the same house as an ailing parent. Many of us are living longer these days, and we are also having children later or having families for a second time as we re-marry. This is where we get the nickname the 'sandwich generation'.

Often as we try to assist aging parents we are still also trying to care for our own families. Living in the same home could make life easier. It takes away less of the carer's personal time to be right on the premises.

This means you are giving up your independence in some ways, though being able to share the financial responsibility can often offset this feeling. However, it may also mean that you give up your own stake in the realty market.

With a realty market that almost doubles every ten years, you may want to consider keeping your stake, perhaps by renting out your own property. Often, in these days of longevity, we are the 'old' looking after the 'older' and it is difficult to predict if our own health will always allow us to stay in this situation.

There can be many reasons why you or your spouse may not be able to stay in the home of the aging parent. Arthritis may make the stairs unmanageable, there may be breathing problems develop, you may want to move to be near a specialized hospital for yourself, one of you may have to enter a nursing home that is not close by. It sounds morbid, but the list is endless and real.

By living with your parent you have limited your own choices, especially if your parent has a reverse mortgage. This could mean that if you are forced to move for health reasons the parent may not be able to move with you; often as soon as the parent wants to move out of the house, the loan must be paid in full.

This will cause no problem unless you are in a down market where the selling price may not be as high as anticipated. You cannot rent the property as it is not allowed in the rules. Meanwhile you are dealing with some type of health problem!

It is noble and desirable to look after an old parent, but do check the small print as they say. It should not be at a large cost or disruption to your own financial well being or health.