Your 70-Year-Old Homeowner May Also Be Your Next Buyer!

Happy Friday!

Every week I research the questions consumers are asking Google and ChatGPT about home purchases, mortgages and the issues surrounding homeownership.

This week, I'm seeing a lot of questions involving senior homeowners, reverse mortgages and what happens to the family home when a parent passes away.

Questions like:

“Mom has a reverse mortgage. What happens to the house when she dies?”

“Can we inherit the house?”  “Can we keep it?”  “What happens to the equity?”

“Does the bank own the house?”

But there's another side of this conversation that Realtors shouldn't overlook:

Your 70-year-old homeowner may not just be your next listing. They may also be your next BUYER!

Many of our senior homeowners are sitting on substantial equity in homes that no longer fit their lives.

Maybe the house is too large. There are too many stairs. The yard has become a burden. They want to move closer to their children or grandchildren. Or perhaps they'd simply like a smaller home that better fits the next chapter of their lives.

The obvious assumption is:  “They'll sell and pay cash for the next house.”

But that isn't necessarily their only option.

Reverse Loans for Purchase

A reverse loan will allow an eligible homeowner age 55 or older to purchase a new primary residence using a combination of their own funds and a reverse mortgage—in a single transaction.

That can allow the homeowner to retain more of the proceeds from the sale of the previous home rather than putting all of that cash into the next property.  This provides them with additional savings for the future.

And there is no required monthly principal-and-interest mortgage payment with a reverse loan. The homeowner must continue to occupy the property as their principal residence, and pay their property taxes, homeowners insurance, maintenance and applicable HOA expenses.

This can completely change the conversation about right-sizing.

From Karen's Desk — This One Is Personal

Reverse mortgages aren't just something I work with professionally. My own family used one.

When my mother was 75, I helped her put a reverse mortgage on her home. Over the years, she used some of her equity for things that made her life better—including remodeling her bathroom and buying a car.

Later in her life, her needs changed. Near the end, she required 24-hour in-home assistance, and her home equity became another resource that helped us provide the care she needed while allowing her to remain at home.

After Mom passed away, my sister and I didn't lose the house to the reverse mortgage company.

We sold an aset and used a portion of those proceeds to pay off the reverse mortgage. We then kept her home and rented it for another ten years before eventually selling it.

A reverse mortgage is a loan secured by the property; it doesn't mean the lender owns the home. When the loan becomes due, the heirs can determine how they want to satisfy it based on the circumstances and applicable loan requirements.

For our family, Mom's home wasn't simply an asset to preserve for her children. It was her asset, and it helped take care of her when she needed it.

Ask Karen

“Mom has a reverse mortgage and just passed away. What do we do with the house?”

First, don't panic—and don't ignore notices from the loan servicer.

They may sell the property, repay the reverse mortgage from the proceeds and retain the remaining equity.

They may choose to keep the property and satisfy the reverse-mortgage payoff, potentially using other assets or new financing.

And if the balance is greater than the property's value, in some cases the heirs can buy the property for 95% of its appraised value .

Timing matters, so as soon as a parent passes the heirs should bring in someone who understands reverse mortgages immediately, rather than waiting several months to decide what to do with the property.

Realtor Talking Point of the Week

Here's the question I'd ask your senior homeowners:

“If maintaining this house eventually becomes too much, have you thought about where you'd like to live next?”

Don't assume they're going to rent.  Don't assume they'll pay cash. And don't assume they're going to stay in the current home forever.

Start the conversation about what they actually want their next chapter to look like.

AI Prompt of the Week for Realtors

Copy and paste this into ChatGPT:

Act as an experienced Orange County Realtor writing to longtime homeowners age 62 and older. Create a warm, respectful, non-salesy email about whether their current home still fits the next chapter of their lives. Mention reasons someone might consider right-sizing, such as maintenance, stairs, wanting to travel more, or moving closer to family. Explain that selling does not necessarily mean they must become renters or put all of their sale proceeds into the next home. Mention that qualified homeowners may be able to use a HECM for Purchase to buy another primary residence, and encourage them to speak with a knowledgeable mortgage professional about their options. Do not provide financial, tax or legal advice. Keep the email under 250 words.

One More Important Conversation: Include the Kids

One thing I strongly encourage with reverse mortgages is including the adult children in the conversation.

Many of the fears surrounding reverse mortgages come from misunderstanding.

No, the bank doesn't own the house. The homeowner retains title.

Yes, the children can inherit the property. But the reverse-mortgage balance will eventually need to be satisfied.

And yes, there may still be substantial equity for the family. If the property is worth more than the loan balance when it is sold, the reverse mortgage is repaid and the remaining proceeds belong to the homeowner or estate.

Those are conversations I'd much rather have with the family today than have the children trying to figure everything out after Mom or Dad has passed away.

If you have a senior homeowner, an adult child helping Mom or Dad, or a family that has inherited a property with a reverse mortgage, please call me early.

These situations deserve thoughtful planning, and I'm always happy to help you and your clients understand the options.

Have a wonderful weekend!

Karen Card
The Card Team
Sr. Loan Officer | NMLS #235218
American Pacific Mortgage Corporation

Helping Veterans, Self-Employed Borrowers, First-Time Buyers, Seniors, Families in Transition and Homeowners Navigate Today's Mortgage Market.