Mom mentioned a reverse mortgage. Now what?

First, the thing I want you to know

My parents have a reverse mortgage. They told my siblings and me they were considering it, asked what we thought, and let us know when it was done. It eliminated their mortgage payment and gives them a small monthly check on top. I was not in the mortgage business yet. I was the adult kid at the table, and I remember exactly which questions I was embarrassed to ask. So ask them.

"Will the bank take the house?"

No. Your parents keep title. The lender holds a lien, like any mortgage. When the last borrower passes away or moves out for good, the loan becomes due. At that point the family has choices: keep the home by paying it off, sell it, or sign it over. Contact the servicer promptly when that happens and follow the timelines in the due-and-payable notice; extensions exist but are conditional and granted by the servicer under HUD rules.

"What happens to the inheritance?"

This is the question people feel worst about asking, and it's a fair one. Here's the honest math. The balance grows over time because interest and insurance accrue rather than being paid monthly. Whatever the home is worth beyond that balance when it's sold is still the estate's. If the balance ever exceeds the home's value when the home is sold, FHA insurance covers the gap; the estate does not owe the difference. If the family wants to keep the house, it can be bought for the lesser of the balance or 95 percent of its appraised value, which does mean paying that amount.

The other side of the ledger is the one families forget: the equity your parents use is equity that doesn't have to come out of your pocket later for a new roof, in-home care, or the gap when one Social Security check stops. In my family's case, the line of credit is the plan for funding care at home if it comes to that. The house and the equity are theirs. The job is to keep them comfortable and in that home as long as possible.

"Is this a scam?"

The HECM is a federally insured, regulated loan. Before an application can be processed, the borrower must complete counseling with an independent HUD-approved counselor whose job is to make sure they understand it. Lenders can't skip that step. Protections include a non-recourse guarantee, conditional rules that can let a younger spouse remain in the home, a three-business-day right to cancel on non-purchase HECMs, and a prohibition on prepayment penalties. Those protections don't remove every risk. Be cautious about pressure to sign, promises of free money, or anyone urging your parents to use the proceeds to buy another financial product. We'll go through the obligations below and the alternatives, including doing nothing.

"What should I actually be worried about?"

• Taxes and insurance. If they fall behind, the loan can be called. If keeping up is a concern, the lender can set aside part of the proceeds to pay them automatically (a LESA). Ask for it if it would help you sleep.
• A younger spouse. If one parent is under 62 or not on title, make sure they qualify as an eligible non-borrowing spouse, and understand that the protection is conditional and provides no new funds after the borrower dies. I check this on every file. Here's the full explanation.
• Draining the line early. A lump sum at closing that sits in a checking account is the worst use of a HECM. A line of credit that grows and gets used deliberately is usually the best.
• Moving within a few years. The upfront costs are real. If a move to assisted living is likely soon, the math often says wait.
• Pressure. From anyone, including me. If your parents feel rushed, something is wrong. There is no deadline on this decision.

How to have the conversation

Get on the call together. I'm licensed in 20 states, so a daughter in Seattle, a son in Nashville, and parents in Sun City can all be on the same Discovery call. If the family is in Arizona, I'll come to the kitchen table. I'll go through the numbers with everyone in the room, answer the awkward questions, and tell you plainly if a reverse mortgage is the wrong move. Nobody has to decide anything on that call.

If your parents aren't ready to talk to a lender, that's fine too. Watch this video together, then send me the questions that come up.