Mortgage lenders can offer options to pay home’s costs

Ilyce Glink and Samuel Tamkin

Q: My wife and her sister were given their mother’s home when she passed away. The property was mortgage-free. For the past six years, her sister has been living in the house.

We all are in our mid-60s. My wife’s sister is retired, and we are about to retire. We’ve agreed that she can stay in the home until she passes away. But that isn’t going to help us when it comes to paying expenses of the property.

Is there any way the sisters could do a reverse mortgage or get money out of the equity in the home? Because the sister living in the home can’t afford to help with taxes and upkeep, anything we get from the home would help offset the amount of money we will be paying once we retire.

A: First, we urge you to find a good mortgage lender or mortgage broker to talk to about the situation. You need some knowledge to inform your decision-making process, including the approximate value of the home your sisterin-law is living in as well as your own home’s value.

A few things you should know about reverse mortgages: The owner of the home must be 62 or older; the home must have no existing loans or a loan with a low balance; and reverse loans can be expensive to take out.

Conventional loans are generally less expensive and carry lower interest rates. Granted, the reverse loan will give you money on a monthly basis for years to come and the conventional loan will fund all the money when you take out the loan.

A third type of loan you should consider is a home-equity line of credit that would allow you to draw money from the home from time to time to pay expenses and accrue interest only on the cash you borrow. But this loan will also require you to make monthly repayments to the lender.