Will Mom and Dad use up my inheritance?
While tapping into their home’s value, your parents’ home may continue to appreciate, potentially leaving some equity after the loan ends—but not always. It’s possible for them to use up their remaining equity. However, this option may allow them to live more comfortably without depending on family support.

Will the bank take their home?
Your parents will keep ownership and live in their home as long as they meet the loan requirements. They must keep property taxes current, maintain homeowner’s insurance, and keep the home in good repair. Failure to do so could cause the loan to be called due. Just like with a traditional mortgage, a lien is placed on the property, but your parents retain title while complying with the loan terms.

How much money will they owe when the loan is repaid?
The repayment amount includes the total borrowed, accrued mortgage insurance premiums, accumulated interest, servicing fees, and any other financed costs.

How do my parents repay the loan?
They can repay by selling the home and paying off the lender (keeping any leftover proceeds), reimbursing the lender directly, or refinancing the loan.

What happens to the equity if the home is sold to repay the loan?
Either your parents or their heirs can keep the home by paying off the loan balance, or sell the home and use the proceeds to repay the loan. Any remaining equity belongs to the owners or heirs.

What happens if my parents move into a senior care facility?
The loan becomes due when the last borrower permanently leaves the home—for example, moving to senior care, selling the home, passing away, or moving in with family.

What if the loan balance exceeds the home’s value?
The Home Equity Conversion Mortgage (HECM) is a non-recourse loan secured only by the property. Mortgage insurance protects borrowers, ensuring they never owe more than the home’s value when the loan is due. Heirs can keep the home by paying the lesser of the loan balance or 95% of the home’s appraised value, minus closing costs and commissions.

What risks do my parents face with a reverse mortgage?
Typically, reverse mortgages don’t affect Social Security or Medicare benefits. However, they may impact other assistance programs—so it’s important to consult with me, a tax attorney, or a counselor. Failure to meet loan terms could lead to foreclosure. All risks should be reviewed with your own financial or legal advisors.

Are there restrictions on how my parents spend the loan proceeds?
No. Your parents can use the money any way they choose—paying off debts, making home improvements, traveling, replacing a vehicle, or eliminating an existing mortgage payment. They must, however, continue paying property taxes, HOA fees (if any), and maintain their home.

Will my parents know all the fees upfront?
Yes. I will provide a Total Annual Loan Cost (TALC) disclosure, as required by the Federal Reserve Board. It details all costs over the loan’s projected life, so your parents can fully understand the expenses involved.