Has anyone figured out an alternative to a reverse mortgage for a cash strapped parent?

[Anonymous]

Pay off the HELOC and do a reverse mortgage for the money for repairs.

[Anonymous]

Anonymous wrote:

Anonymous wrote:He needs to move to a 1 bedroom

OP here. I get what you are saying, but he'd have to pay rent then, which would cost easily as much (if not more) than just making reasonable payments on the HELOC. I guess the big difference is that if he were renting he could just spend down his assets including the proceeds from the sale of the home. He needs to work part-time and/or charge a more reasonable rent to his "renter" friend if he truly wants to keep the house. I think he is being really short sighted but that is nothing new. Delayed gratification was never his thing. Money has always burned a whole in his pocket. We were not financially stable growing up.

OP, no suggestions, unfortunately, just lots of sympathy. My parents are the same way. Strategic, long-term planning is beyond them. They're terrible with money. They refuse to downsize and I strongly suspect they took out a reverse mortgage years back. I dread what financial messes I'll uncover when they're gone. Any attempt to talk about the financial reality they are facing is met with accusations at best, insults at worse.

[Anonymous]

Anonymous wrote:OP, not to sound morbid, but how old is he and how is his health? Is he likely to live a long time? If he’s unwilling to sell and downsize, and renting doesn’t make finance sense, I’d just have him use his $30k in assets to pay the thing down on a monthly basis. This leaves him a chunk of change to take care of repairs and other things that pop up. Once the well dries up, he will have more options for assistance programs, especially for home repairs.

If it were me, this is what I would do. I would also immediately get his name on low-income senior housing, because it’s likely he will eventually run out of money and need a housing option that works with his SS fixed income. It sometimes takes about four years to be approved for housing.

OP here. He does not take care of himself, but he also doesn’t have any specific health issues (yet) other than just being old and sedentary.

I don’t know if he would qualify for housing assistance with the home equity he has? But I will look into it. I do think he will qualify for heating and cooling assistance based on income alone. I think my next step is to talk to a mortgage broker and see if a new mortgage/refinance is even possible under the circumstances. He may be too much of a risk, but at the same time the house would be collateral so I just don’t know. Sadly I don’t think he wants to make payments - he just wants to be handed a pile of money. And yes, he could work PT but I don’t think he will. He was driving uber eats for a while but then said it wasn’t “worth it.”

[Anonymous]

Do you and/or your sibling have any interest in acquiring this property? If not, let your dad get his reverse mortgage and hopefully he won't outlive it. Your dad and this house sound like a money pit.

[Anonymous]

Agree with other poster that he should just pay off the HELOC in monthly installments so there is money available for home repairs. Is he current on all his other bills?

[Anonymous]

Anonymous wrote:Agree with other poster that he should just pay off the HELOC in monthly installments so there is money available for home repairs. Is he current on all his other bills?

OP here. Yes, I believe that he is for now, but it would only take one unexpected expense for him to fall behind/need to use savings.

[Anonymous]

If 30k will satisfy it I'd just ask my siblings to chip in pay it all together, and then inherit the house free and clear eventually. This is assuming he's not a crazy spender who will get into more debt but that doesn't sound like the case.

Or you all could loan him the money, but at the most favorable terms possible and knowing you'll never evict if he doesn’t pay you. And you can tell him you'll only do that if he'll raise the rent on his tenant to a reasonable amount ideally enough to cover his monthly payment to you.

[Anonymous]

I took a lien on my parents’ house and paid off the heloc. it wasn’t my first choice but was definitely the best option given the circumstances.

Keep in mind that your dad may qualify for assistance programs for home repairs based on his age and income - sometimes they cover new windows or appliances or heating system upgrades.

[Anonymous]

Anonymous wrote:My widowed father lives out of town in a middle cost of living area. He lives in the house I grew up in. The primary mortgage has been paid off for several years but he still has a HELOC that was taken out decades ago and has never been repaid apart from interest payments. He has been notified that he will need to start paying a certain amount towards principle based on (I assume) the original terms of the HELOC. He has maybe $30k or so in cash and stocks plus the value of his home equity and that's it. He otherwise lives on social security which isn't that high because he took it at 62. He could probably pay off the HELOC if he liquidated all of his other assets but he doesn't want to do that because he won't have any money for home repairs, etc. and as the house is getting quite old, it's not an outlandish concern. He adamantly does not want to move. He already has a roommate who does pay rent but I don't think it's market. He wants to do a reverse mortgage which my sibling and I and other family members think is a bad idea. Can anyone think of any options not listed below, and/or does anyone have any thoughts on the options?

1. Sell the house and move somewhere more affordable. (He doesn't want to and doesn't know where he would go.)
2. Do a reverse mortgage (I think the fees and interest are predatory and have a very real concern that if he "lives too long" essentially he will be evicted from his own home. The stats on that are pretty bad, especially past the 10 year mark. He's in his early 70's and in ok health but not stellar.)
3. Try to refinance the HELOC and get a more reasonable payment that is still taking care of some principle. (I'm not sure this is even possible without a job, and he would likely need to spend down current assets to make the payments.)
4. Pay off the current HELOC and essentially be out of cash. (But then how would he pay for repairs ie: roof or HVAC, etc.)

Has anyone been in a similar situation and what ended up happening?

Early 70s in ok health means he needs to get a part-time job. It wouldn’t take much to earn enough to make a $650 payment (plus taxes).

[Anonymous]

Anonymous wrote:It sounds like your Dad is not considering his own best interests— roommate not paying market price, desire for reverse mortgage.

How is he doing in other areas? Does he seem sharp and on top of things?

If you’ve noticed other changes, I would worry about his mental health in light of poor decision making. Is he seeing a doctor regularly? Even depression can lead to making bad decisions. Please consider getting him checked out.

Ha ha - there are lots of people who make poor decisions their entire life.

[Anonymous]

Reverse mortgage isn’t predatory, it’s exactly the instrument you need for someone who insists on living somewhere they can’t afford. You know who the villain is in this story.

[Anonymous]

Anonymous wrote:If 30k will satisfy it I'd just ask my siblings to chip in pay it all together, and then inherit the house free and clear eventually. This is assuming he's not a crazy spender who will get into more debt but that doesn't sound like the case.

Or you all could loan him the money, but at the most favorable terms possible and knowing you'll never evict if he doesn’t pay you. And you can tell him you'll only do that if he'll raise the rent on his tenant to a reasonable amount ideally enough to cover his monthly payment to you.

Don’t do this. I have a mom who I bailed out several times and she has gone in and done re-fis to take out cash, then the cycle begins again. I stopped funding her, but give her toilet paper and laundry soap for Christmas and told her that we would pay her rent if she sells and uses the funds for living expenses, but she won’t sell.

[Anonymous]

Id ask this in Real Estate thread.. Great info over there..

Good Luck!

[Anonymous]

What about cutting expenses? Also, if he's early 70s, could he get a part time job? Is there something related to his hobbies that he could do?

If the house needs repairs, how handy is he? Can he do more of the work himself since he has a lot of extra time?

[Anonymous]

This should go in the Money forum, not here, if you want helpful answers.