The Private Reverse Mortgage
The Wall Street Journal recently ran an article about the benefits of having a younger family member provide a “reverse mortgage” to a parent. A traditional reverse mortgage typically requires the borrower to be at least 62 years old and own and occupy the residence that will secure the mortgage. The private reverse mortgage is a similar type of contractual arrangement, but can be much more flexible. As a private transaction, the arrangement can be made with a person under age 62, it can be secured by a vacation property, rental property or the borrower’s former residence if the he or she has moved to an assisted living or other facility. Additionally, a private reverse mortgage is generally much more affordable than a reverse mortgage from a conventional lender. Of course you will need to weigh all the risks and benefits, but for those who can undertake this type of arrangement it can be very beneficial to parent who will not qualify for a conventional reverse mortgage.
