Taking Care of Mom and Dad: Real Estate and Reverse Mortgages Introduction

It horrified me to come across my parents' loan statement that detailed the status of the house. I thought they had paid off the mortgage years ago...but what I found was exactly the opposite. They had been underwater for some time, having taken out a second mortgage, a third -- and even a home-equity loan in order to do some repairs. No wonder they were so willing and able to help pay for their grandchildren's education and give me money when I started my business 10 years ago. But now what? I don't want them to lose the house...

Real estate -- a primary residence -- is the most valuable asset most people own. So, in most cases, the largest asset your parents will have is the house or condominium in which they live.

The good thing about real estate is that it's fairly easy to identify and evaluate. If your parents need to sell it, they usually can. They may not be able to get the price they want, but real estate is often a stable and reliable investment. When it comes time to cash out equity in a home -- especially for parents who've had decades to let their property appreciate in value -- little stands in the way.

Real estate can be difficult to maintain. And, in some families, it can be the source of a lot of emotional conflict. Your parents may have a strong attachment to their home...the place where they raised a family and marked most of their lives' key moments.

The emotional conflict may not be limited to your parents. In many situations, other family members -- your siblings or cousins or uncles or aunts -- may have strong feelings (or worse, legal claims) about your parents' property.

If you're stepping in to help your parents manage their affairs, real estate is a good place to start. Unlike other types of investments, the terms and conditions of most real estate dealings are fairly standard...and, for that reason, people are often more willing to talk frankly about their homes or condos.

If you've ever stood through a cocktail party where people compared mortgage rates in excruciating detail, you know this is true.

In this chapter, we'll consider the real estate issues that you're most likely to face...and the things you can do to make sure your parents get the best use out of the real estate they own.