Your parent is considering a reverse mortgage

First, the thing you are probably worried about

You are not on the hook. A HECM is non-recourse — the home is the only asset the lender can pursue. If the balance ends up larger than the house is worth, FHA insurance covers it and no family member owes a cent. Your parent's other assets are not touched, and neither are yours.

What you may lose is the inheritance, or part of it. That is a real cost and worth discussing openly. It is a different problem from the one most families arrive imagining.

The eight questions worth asking

1. What specific problem is this solving? If there is no clear answer, there is no reason to proceed. “Having more money” is not a plan.
2. How long do they realistically intend to stay? Under five years and the upfront costs will not have earned back. This is the single best predictor of whether it was a good decision.
3. Can they keep paying taxes and insurance? This is how reverse mortgages actually fail. If it is already tight, ask about a LESA — a set-aside that pays those bills automatically from the loan.
4. Have they considered selling? Downsizing often produces more money and no debt. Resistance to moving is legitimate, but it should be a decision, not an avoidance.
5. Is a line of credit better than a lump sum? Usually yes. Interest accrues only on what is drawn, and the unused portion grows. Anyone pushing a large lump sum should be asked why.
6. Is there a younger spouse? They must be correctly listed as an eligible non-borrowing spouse or they can lose the home later. Verify this appears in the paperwork.
7. Does anyone stand to gain from the cash? Reverse mortgages are a favourite vehicle for annuity and investment sales. See below.
8. Who is the lender, and what is the origination fee? It is capped at $6,000 and it is negotiable. Margins differ between lenders on identical files.

Worth reading before you sit down

What has actually gone wrong for people, and which of those causes the rules have since addressed — useful because it separates a well-founded worry from one about a practice that was banned a decade ago. And eight situations with a straight verdict on each, which is often a faster way to locate your parent than a list of features.

How to have the conversation

The hardest part is rarely the finance. It is that the conversation carries a subtext neither of you wants: that they are getting older, that money is tight, that they might need help. Some things that help:

• Ask what they are trying to fix before offering an opinion. It is frequently not what you assumed — often it is a mortgage payment they have never mentioned.
• Do not lead with the inheritance. Even when it is a fair concern, it lands as though you are more interested in the house than in them. Raise it later, plainly, once you have understood the problem.
• Go to the counseling session. Counselors welcome family. Hearing the same explanation together removes months of second-guessing.
• Separate “is this a good product” from “is this the right product for you.” Most family arguments conflate the two.
• Be willing to lose the argument. It is their house and their decision, and quite often they have thought about it longer than you have.

If they already have one

Two things to do this month. Find out who services the loan and write down the loan number where you will find it again — the most common family disaster is heirs discovering a reverse mortgage weeks into a six-month clock. And confirm that property taxes and insurance are current, because that is the failure that costs people the house.

The full explanation of what happens to the home is here.

You are welcome on the call

Genuinely. Bring your questions, bring your scepticism, and ask the awkward ones. If a reverse mortgage is not right for your parent, hearing that from the loan officer tends to settle it faster than hearing it from you.