Fusion 360
A reverse mortgage can be stressful and confusing. Having children around the house can make the stress level increase. If the children are in their teens, chances are they are curious as to how this might affect them. If this topic is one that arises, follow this list to help them understand the process.
The fees given by mortgage companies on reverse mortgages are often higher than normal. This might be something to explain to the teen so that they realize where the money is going and why.
This would be a good time to explain what interest and equity is. Explain to them that the interest rates will go up when the mortgage companies give out a reverse mortgage, but the equity remains the homeowners’ possession.
This is one of the more important parts of a reverse mortgage. When the homeowner dies, the house will be sold to pay off the loan to the mortgage companies. This might be something that the heirs want to know since they wont inherit the house.
Inheriting the cost of a loan unexpectedly can be difficult, but there are many options to make it manageable. If the family ever moves, the loan will need to be paid back to the mortgage companies. Explain this to the teenagers so they understand why it has to be paid back.
Tell them that the reverse mortgage does not replace other home costs. The owner is still responsible for taxes, insurance and other home improvements or maintenance. This might be hard for them to understand since they only see money-exchanging hands without a reason. Giving them these nuggets of knowledge will help them understand the process.
Ciera Putnam is a finance and mortgage writer. Information provided by Castle & Cooke Mortgage (NMLS #1251). She writes for Fusion 360, an advertising agency in Utah. Find her on Google +
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