Reverse Mortgage Loan Blog

Dear Bruce: My grandson and his wife are paying off the loan on their small condo, which will be even smaller when their second child arrives. With today’s housing crunch, they are in a financial bind. His father was investigating the reverse mortgage program offered by HUD, but he doesn’t have much equity.

Since the immediate family is aware of my will and desires, my son-in-law suggested my getting involved with this program. I am an 85-year-old widower with sufficient income to adequately support my daily living and medical expenses. My home is paid for and is conservatively worth $650,000. Using the reverse mortgage program, I would intend to give $100,000 to my grandson and his family. To preclude his paying income taxes, I understand I would have to be a co-signer of any new home. Is this correct? — H.J., San Diego

Dear H.J.: You are certainly generous, going out of your way for your grandson and his family. At your age and given the value of your home, a reverse mortgage, although expensive, would solve this problem. If you buy the home with your grandson, I don’t believe there would be any gift tax because you haven’t made a gift. You’re just paying your portion of the down payment. You could also give the $100,000 to the grandson and claim it against your lifetime exemption. But I would be more comfortable with your name on the deed. If something goes badly, at least you have some protection on your $100,000.

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