Reverse Mortgage and Estate Planning

As you investigate the possibility of a reverse mortgage, you may wonder about your heirs should you pass before the loan is due.  It may be an uncomfortable topic to think about, but is important nonetheless.  You may wonder whether or not to include them in the planning process.  It is important to consider your current situation to decide who will be involved in the planning of your reverse mortgage.

It is important to understand that with a reverse mortgage you are using the equity in your home for many possible reasons, like long term care or debt consolidation.  By using the equity in your home, less equity is available as inheritance.  If you decide not to communicate this to your heirs, you should consider including this information in your will.

If you should pass prior to the repayment of the loan, your estate will be used to cover the repayment of the loan.  This will include the loan and any interest or other fees associated with the loan.  It is important to note that the outstanding debt will not pass to your heirs and that any left over equity will pass to your heirs.