Don’t Keep it a Secret
If you are a potential Home Equity Conversion Mortgage (“HECM”) borrower, you need to talk with your kids. Some children have a very strong, negative reaction to parents “mortgaging their inheritance”. One can understand this, but regrettably families do not generally all live together under the same roof and a home may be the greatest single retirement asset an elder person may have. So an olderadult may have no choice but to liquefy the equity in their home. The best advice from any reputable lender is to not take a HECM and keep it a secret from your children. It’s a recipe for disaster and unhappiness. Get your children involved early.
Kids Living at Home
Taking a HECM, with adult or young children living in your home, is even more complicated. While qualified non-borrowing spouses do have protections under the HECM regulations, children do not. This is especially sensitive if you have a disabled child living with you. Taking a HECM on your home, unless you have made a stable arrangement for the care of such children after your death, is a very poor decision. Better to downsize, and continue own outright a smaller home.
The Sandwiched Generation are adult children. They are, by and large,“sandwiched” financially between looking after their own family and taking care of possibly both sets of parents. The financial pressures are enormous. Sometimes a simple temporary cash flow deficit spells disaster.
If you are a member of this generation, using a HECM (especially a Lower Cost HECM) on your parents’ primary residence, may well afford you some relief from the financial pressure. How you use it depends on the circumstances. A HECM is not “forever”. You may repay it on behalf of your parents as your financial health improves.
You can also use the HECM to help your parents buy a home closer to you, or make home improvements so they can “age-in-place” more comfortably.
Would you like to learn more?
The “Knowledge Base” has the answers to over 300+ questions you may have on the HECM product.
If you would like to know how much you potentially qualify for, and whether you possibly have adequate monthly cash flow, go to the HECM WIZARD and input your information.
If you would like to reach out and talk with me, fill out the information on Contact Me or email at st.john.bannon@JMCapGroup.com