loan and financing options for elderly

[Lisa Martin]

My family members (late 70's and late 80's)  are house rich and cash poor living on social security and trying to make ends meet.  Their mortgage will not be paid off in their lifetime with about 25 years left on a 30 year mortgage interest rate around 3%.  Balance around $500k.  Payments are just under $3k/month.  

Are loan recasts available to extend the loan and lower their payments or how can they get some financial relief?  It is getting to the point where it seems more peaceful for them to live out their final years without upheaval after living there for 50 years.  It would be nice if they were in a better position but they aren't and it is super sad for them to be so limited.  Nearby properties are expensive so downsizing would help a bit but not the first choice right now.  

The area is very desirable and one idea is for them to get rental income from and ADU (maybe live in ADU and rent the main house). I'd love to help them out but I have no idea how to structure the deal. ADU builds are running around $250k. All they could think of is a reverse mortgage to get the funds. I read the fine print on that and showed them how it doesn't work out to take that type of loan ( 10% interest and a big lump sum draw) and deal with a build. i don't think they can take on the stress. One of them is in his last 5 years of life and going downhill :-( The other one likely has 10-20 years of life left so I'm trying help them with ideas that make the most of what they have in order to stretch out their comfort.

Their property will need to be sold upon their passing and will be split between mixed family siblings.

Any ideas here?  

[Thom MacFarlane]

Reverse Mortgage. Pays off their existing debt, provide immediate cash and also access to future cash with a line-of-credit. It takes the stress off their finances and allows them to focus on their lives and other activities. HUD may require they perform any deferred maintenance on the property prior to/ or a holdback from the loan closing of the reverse mortgage which also benefits the cash strapped senior.