Agent

Funding parents’ reverse mortgage a win-win

Each side should use attorneys for protection
Published on Jan 26, 2009

DEAR BENNY: I want to help my older parents so they can have a more stress-free and comfortable retirement, and believe I am in a position to do so. They have a home in an area where housing prices are actually still increasing, which makes the scenario even more attractive to my husband and me. Their home is valued at about $250,000. They have an interest-only mortgage with a balance of $115,000. I would like to give them a personally financed reverse mortgage of $115,000 to pay off this first mortgage. So I would give them $115,000 and set the interest rate at 6 percent. The $115,000 grows for me like a long-term, fixed-rate, compound-interest CD would grow, except I would get no payments of interest or principal until they sold the house or the house was sold because they passed away. They would make no payments so long as they were living in the house and I could not/would not get back my investment or interest until the house was sold. Is this correct? For someone ...

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