For adult children & family members

How it affects inheritance

Think of it in plain terms: the loan balance grows over time because no payments are being made, and the home's value may also change. What heirs inherit is the difference between the home's value and the loan balance at the end. That number can be smaller than it would have been without the loan — sometimes meaningfully so — and that trade-off deserves to be discussed openly rather than discovered later.

I'll run the balance projection out over 10, 15, and 20 years so you can see the arc for yourself rather than take my word for it.

Non-recourse protection

On a federally-insured HECM, neither your parent nor you will ever owe more than the home is worth when it's sold. If the balance exceeds the value, FHA insurance covers the difference. Heirs can sell and keep remaining equity, refinance to keep the home, or walk away.

The independent counseling requirement

Before applying, your parent must complete a session with an independent, HUD-approved counselor who has no financial interest in the outcome. Use it. Ask to be on the call.

Red flags of a predatory lender

• Pressure to decide quickly, or any language about a deadline or expiring rate.
• Upfront fees to 'reserve' a rate or 'hold' a loan amount.
• Refusing to include family members in meetings, or discouraging you from joining.
• Bundling the loan with an annuity, insurance product, or investment purchase.
• Vagueness about total costs, or unwillingness to put figures in writing.

Bring the family in

I encourage clients to bring family into every meeting. Join by phone or video from anywhere. If your parent wants you to be the primary point of contact, that's fine too.