One reason some people hesitate to get a reverse mortgage is because they don’t want to cut into the amount of inheritance they want to leave to their kids. Once a homeowner dies, reverse mortgage heirs may be left with the task of selling a home to pay off the debt, or letting the mortgage lender sell the home.
Will There Be a Profit?
Depending upon how much equity is in the home, reverse mortgage heirs may end up pocketing a profit on the sale of a home with a reverse mortgage. In other cases, there may be nothing left over after the reverse loan is paid off.
Who Wants Your Home?
A big question you have to consider is whether or not your kids want to keep the home after you pass away. Take the time to discuss your reverse home mortgage with your kids and how it might affect your estate. If you believe that your heirs really want to keep the house, there are a couple of steps you may want to take.
Buy Life Insurance
A common concern people have about getting a reverse mortgage is whether or not their heirs may have enough money to pay off a reverse loan if they want to keep the home. Purchasing a life insurance policy that covers the cost of a reverse loan is one way to ensure that your kids can keep the property. The life insurance policy should name your heirs as beneficiaries and should be a long-term policy.
There are many pieces to the reverse mortgage puzzle. Spend some time looking at websites about these loans and familiarizing yourself with reverse mortgage guidelines. Then consult with a housing counselor who has passed a HECM exam approved by the Department of Housing and Urban Development (HUD).