Reverse Mortgage meets Estate Planning

[James Harper]

Hello All,

I think I have a great opportunity, but I want to make sure I deal with it the best way possible. My 63 yr old mother has a home in Santa Clarita, California that she owes $99K on a fixed 3.375% mortgage with a little over 19 years to pay it off. Her PI is $585 and pays TI seperately. A quick Zillow search shows the home to be worth $275-350K. Of course I would need a more through market analysis, but it sounds right for the area. She claims the home is worth She has a $40k IRA and receives $1063 a month in SSI. I live in Idaho, but I do visit every other year.

She has posed to me that she has the property in a trust and is interested in doing a reverse mortgage, but has found it cost prohibitive and she is also interested in leaving me with an inheritance.

Her offer is to have me pay the $585 for the next 10-19 years while she lives in the home, maintains it and leaves it in the trust.

My initial thought is that if I do it that way, I am making a good faith donation, rather than a business decision. My thoughts are that I should pay the mortgage and at the same time establish a 2nd lien on the home. My thoughts are this binds the property to me rather than a a legal document that can be changed at a whim. She has also offered to establish a insurance policy, but again I am uncomfortable with this as the beneficiary can be changed quickly and easily.

So I am interested to see what everyone thinks about as far as going with the trust, establishing a 2nd lien (this way I will be a secured creditor), purchasing the home outright and leasing it back to her or something else.

Thanks in advance for reading and your advice!

Jim