There are many misconceptions about HECM reverse mortgages and their impact on children’s inheritances.
Here are just a few ways that a reverse can actually protect what you leave to your heirs:
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If the house appreciates just 4% annually, equity will actually increase in most cases
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If not using equity to pay for living expenses, then another asset will be depleted
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If negative equity, only 95% of homevalue needs to be repaid
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Accrued interest may be tax-deductiblefor heirs when paid off (Consult with CPA)
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Nearly one-third of midlife adults with at least one living parent (32%) are providing financial support to them
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Over half of midlife adults(54%) provide $1,000+ for monthly expenses such as food, housing, and medical care
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More than a quarter (28%) of those who provide financial support to their parents consider it a high financial strain on their own family
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Nearly half (47%) are concerned about being able to provide financial support to their parents in the future
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According to a 2020 AARP Study:
HECM & Your Heirs
What They Need to Know​
If it wasn't already difficult enough to make ends meet, inflation made it even harder. That is why it's not surprising that nearly 1/3 of adult children provide some level of financial support for their aging parents. Plus, many adult children and their parents are worried about how to fund significant medical costs in the future, such as at-home care or a nursing facility.
In fact, an AARP-sponsored poll found that over 80% of seniors aren't confident they can afford at-home care.
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This financial anxiety can affect the entire family and burden many adult children. Most children we consult with are also concerned about how their inheritance will be affected. A reverse mortgage can be the perfect vehicle to bring financial peace of mind both now and in the future.