The Sandwich Generation—How a Reverse Mortgage Could Help
On the way to dropping your child off at soccer practice, your mind wanders to your to-do list for the next day, which looks something like this: pick up your mother’s medication, help make her next doctor’s appointment, and work with your eldest daughter to fill out college and scholarship applications. That’s in addition to your day job, where an important project requires all of your brainpower from 9 a.m. to 6 p.m. It’s a position that can feel overwhelming, and for more and more Americans, it’s a challenging reality.
According to the Pew Research Center, “Nearly half (47%) of adults in their 40s and 50s have a parent age 65 or older and are either raising a young child or financially supporting a grown child (age 18 or older). And about one-in-seven middle-aged adults (15%) is providing financial support to both an aging parent and a child.” The term “Sandwich Generation” refers to adults taking care of their aging parents and raising young kids at the same time. Providing financial support for extended family can take a toll on this generation of adults who may already be struggling with their financial futures.
A HECM Could Help
For many older Americans, their greatest source of wealth is in the equity they have in their homes. For those on a fixed income, the ability to tap into this money via a Home Equity Conversion Mortgage (or HECM, also known as a reverse mortgage), could be the best option for older borrowers and their adult children. An extra influx of cash from a HECM could help families pay for things like home health aide and household expenses, or even go towards grocery and driving services.
How Does it Work?
To qualify for a HECM, your parent must be a homeowner 62 years or older, own their home and continue to live within the home. While borrowers are expected to continue paying property taxes, insurance payments and HOA dues if applicable, they do not have to pay back the loan as long as they live in the house and comply with the terms of the mortgage. The home title and ownership stays in the family and will pass to the heirs upon death, and then the loan must be repaid.
To find out if a HECM is right for your family situation, contact Open Mortgage today.
Things to know about Reverse Mortgages:
- At the conclusion of a reverse mortgage, the borrower must repay the loan and may have to sell the home or repay the loan from other proceeds
- Charges will be assessed with the loan, including an origination fee, closing costs, mortgage insurance premiums and servicing fees
- The loan balance grows over time and interest is charged on the outstanding balance
- The borrower remains responsible for property taxes, hazard insurance and home maintenance, and failure to pay these amounts may result in the loss of the home
- Interest on a reverse mortgage is not tax-deductible until the borrower makes partial or full re-payment