Reverse Mortgage and Surviving Heirs
I am 54 and my mom is 92. We purchased a home and my sibblings are trying to convince my mom to get a reverse mortgage. Basically, I would have to sign ownership over to my mom. If she gets a reverse mortgage, borrowing an amount greater than what is owed, and she dies, what happens with the heirs if they want to keep the home? More specifically, will I have to repay the reverse mortgage plus any accrued interest so that I can stay in the home? Does this require me to qualify for a mortgage to keep the home? I am disabled, have very little income, and will not be able to afford to repay the reverse mortgage or get a new mortgage to stay in the home. Can you explain if this reverse mortgage will hurt my ability to stay in the home (since I will need to repay the reversed mortgage or get a loan) or will it keep me in the home after my mom passes?
Terry Says: You will have to get off the title in order to get the reverse mortgage, because they are not available to anyone under age 62. Then, at your mother’s death, you and your siblings will have 6 months to repay the amount borrowed, plus interest, plus fees– or at least 90% of that amount. At your mother’s age, this is NOT a good bet to make.
I am typically a strong supporter of reverse mortgages when seniors plan to stay in the home for a while. But at age 92, that does not look like a good possibility. And there are huge fees involved in reverse mortgages, making it worthwhile only to do this if you have a longer time horizon.
You and your siblings need to make a better plan. I don’t know how you two are affording the home right now –including taxes and insurance. I’m assuming that your mother’s Social Security check and any disability benefits you may receive are barely covering the costs. I wish your mother good health and a long life — but it is realistic to assume that she might need care beyond what you can provide. In that case, the state Medicaid program would put her in a nursing home. And it would take her SS check to help pay for that care.
However, depending on the state, if you reside in her home, and if your name is on the title, they might not come after the home to pay for her care — even after her death. So you might be better off staying in the family home and on the title as you are now. That leaves the question of how you would cover the costs, and whether your siblings would object or actually contribute to maintaining the home with you living in it.
Each state Medicaid program has its own rules and practices. So you need an attorney to advise you of the best course. Go to www.NAELA.org — the National Association of Elder Law Attorneys — to search for an elder law attorney in your city. There could be a bit of conflict, because the question is whether the attorney is representing you, your mother, or your siblings. So be careful to describe the situation, and hopefully the attorney can assess the situation and all its facts, and come up with a solution.