In the next few years, my elderly mother will likely need access to the equity in her house in order to continue to keep up with expenses and property taxes. She owns her house outright.
A reverse mortgage seems to be the perfect choice, outside of the rather outrageous fees they seem to carry, which would eat into her funds. So we are taking a hard look at private reverse mortgages, which seem to be a great option. I have read everything I can find online about private reverse mortgages but there is a definite lack of details on how they work.
A few disclaimers: I understand the risks of mixing family and financial matters. The family members involved in this (potential) transaction all completely trust each other. All of her children are (and will remain) equally represented in her will, so I would not anticipate any dispute over her assets.
It's not clear if it will be one or more of her children that fund the loan. For the sake of this question, let's assume it's just going to be me.
How does the loan work logistically? Let's say the total loan amount will be $100K. Would I take the money and lock it up in an account that she can draw from when she needs it? Or would she let me know when she needs to draw funds, and the assumption is that (at that time) I will have the required funds? In short, how are the funds guaranteed to be available?
Also, let's say that she lives to a really ripe old age, and exhausts the original $100K. I understand that we would not be able to force her to sell the house to collect on the loan (just as a bank wouldn't be able to). Would the interest just continue to pile up, and if it exceeded the value of the home, too bad for the lender (which would be fine--I just want to understand how it works)?
Finally, what type of attorney would one use for this kind of loan?