Hi guys,
Wanted to get your opinion on a situation that I am in. My parents (father) took out a reverse mortgage approximately 5 years ago and have accrued about $160k in total. The net worth of the house is worth $275-300k. My father has kept his finances very close to him and does not share it with the family, including my mother, solely out of pride and not wanting us to worry about (him) them. However, given that he is in his 70s, we have a big concern about his finances, especially since I have been the sole provider for my parents - including paying all their bills, property taxes, etc. Note that I do live with them (in my 30s) and long story short, moved back from California to financially help them.
I know my mother has been wanting to downsize the home but my father has been reluctant to want to sell or move out, and I'm assuming the reason why is because the bank now owns it. I haven't spoke to my brother about it, but wanted to get your opinion on what I should do in this situation.
Option one: Letting the bank eventually take over the home. I'm assuming with interest accruing that the equity of the home will be eventually gone within the next 5-10 years. I really do not know if my mom will want to keep the home, just because upkeep is high and so are the property taxes.
Option two: (I am leaning towards this) Having me and my brother pay off the $160k and put the house under our name. I'm assuming that my father had no plan on leaving any heirs to us which is why he did the reverse mortgage, which is fine, but I think from a financial standpoint, this would make the most sense - to purchase the house outright from my parents by buying the debt off of them. It would provide mental reassurance/health, get the home back, and we would profit from equity still since the home is still worth $275k instead of the bank earning that money. However, the caveat is that I would have to withdraw money from my stock account which I would get taxed on capital gain for selling those stocks.
What are your thoughts/opinions on the situation? I've been supporting my parents for the past 6 years, so I think in the end, they would be fine with whatever me and my brother decide. I just want to weigh out all my options and it's not about making profit on my parent's home but rather getting them out of this debt. I have no intentions of removing them from their home as I am financially stable but utterly hate the idea that everyday, the bank is taking away our home. I feel like option #1 is a win (bank) - lose (parents) situation and option #2 is a win (parents) - win (us) but not sure if this is the best financial for everyone in the end.
