Home Equity Line - Elderly Mother

[ando22]

Hi,

I'm new to forums, so please bear with me.

My elderly mother has been living on savings and a small Soc. Sec. check each month, but she is getting low on funds (maybe a year's worth left). She owns her home outright (value = $350k or so). Except for Social Secuity and a small amount of interest, she has no income, so she could not qualify for any type of HELOC herself. I'm wondering if banks would give a HELOC on her home if I agreed to make the payments on the loan. I am not on her deed, but her will states that I will inherit it upon her death.

We're just trying to have to avoid selling and she wants to stay in the home. I've heard less than favorable things about Reverse Mortgages.

Thanks for your thoughts.

Tim A.

[Bruce Brown]

In order for you to get the HELOC you would need to go on the loan as a co-borrower and then your income could be considered. Of course your liabilities would also be considered. You could be added to title but many banks would want you to be 'seasoned' as an owner on the property anywhere from 6 months to 1 year before they would allow you to do this.

While I agree reverse mortgages aren't for everyone they do serve a purpose for people in the right situation and your mother could fall into that category. I would not eliminate it from consideration simply because of what you've heard and would talk to someone in your market area that specializes in them.

[ando22]

Hi, Bruce,

Thanks a ton for your quick reply.

Just to clarify, would the banks REQUIRE that I'm added to the title (for up to a year) before even considering a HELOC in this situation? Plus, wouldn't being aded to the title have some tax considerations in the event that she does eventually have to sell the home?

Thanks for your help.

Regards,

Tim

[Bruce Brown]

No, they won't necessarily require it. This is a situation where everyone you talk to could give you a different answer because the banks make their own lending decisions on equity lines. These aren't sold on the secondary market so guidelines don't universally conform.

As far as the tax issues of course I have to tell you that I'm not a tax professional and can't give you tax advice but in this situation there shouldn't be any consequences from just going on title but if she has a trust or anything set up you should consult with your tax preparer to be certain.

[ando22]

Bruce,

Thanks for the help. I'll guess I'll just start calling/shopping around to see what answers I get.

I just want her to be able to stay in the house as long as possible, and this may be a way to provide for her modest living expenses and also to be able to keep up the house (all while whittling away at my inheritance, if I don't pay the balance off!).

Regards,

Tim A.