By clicking Talk to a Specialist
for information about our privacy practices.
Additionally, the cost of her maintaining homeowners insurance on the property has skyrocketed to the point where it takes 1/5 of her monthly income, leaving little funds for the maintenance the home requires. The reverse mortgage company requires her to maintain homeowners insurance on the home and keep up with the maintenance.
If/when we place her in an ALF she will lose the home due to a lack of residency. If we sell the home and pay back the reverse mortgage it will affect her medicare / Medicaid eligibility.
I, personally, think reverse mortgages are the worst legal scam around. They prey on the poor and elderly. I would wholeheartedly recommend you stay as far away from them as you can. If it is a choice between only a reverse mortgage and a home equity loan, I would strongly urge the home equity loan.
So you can see the ways in which this can be a problem.
For some it works well. It did for my partner's Mom who took one out and was able to remain in her home with some caregivers on a cleaning, cooking, shopping help basis. She was able to die at home. The mortgage was paid after her death and my partner inherited whatever remained.
So answer is that it DEPENDS but what you MUST have is a good company with a very reliable and long history, and you must know all the facts, all the positives and all the negatives, and then make the decision that hopefully works for you (or your parent.)
I wish you luck. Just a few things to think about.
Is the house you're thinking of remortgaging to pay for care the family home that your parents raised seven children in? And your father is now living there alone?
Take a second mortgage instead. It will cost less. Or better still, why not sell the house? Go into senior living instead and have money to hire help where needed. Many senior communities also have memory care and nursing home care right on the premesis if a person gets to a point where they need it.
do you have a lady bird deed set up on the home? Are you the DPOA of estate?
First use up all cash assets, all monies including life insurance. Ya may take a hit on the life insurance. If cashing Life insurance out you can put 12,000 aside to funeral arrangements (you have to create a account with funeral home and set up) and use remaining for the cost of facility. State will want to see you used remaining $ for the facility.
when the person has depleted all the cash assets the state will place them on state Medicaid. If the person has a pension and or social security the state will pay the difference in cost. The state can not make you sell the home but you will have to maintain up keep and taxes.
if there’s no assets contact your department of health services (DHS) in your area get them on state Medicaid.
I am going through same situation but we’re going to sell the home and keep life insurance going.
If you decide to proceed with the reverse mortgage, read the contract very carefully and also have a qualified attorney or financial advisor study the contract for hidden fees and holes in the contract that could allow for additional fees. Be aware that most reverse mortgages are nullified if the owner spends more than 30 days not in residence. This means that an extended stay in hospital/rehab or at a relative's house could make the entire note immediately payable.
And that the house that has the reverse mortgage will also gain highly in value so that when the house is sold it will easily pay off the RM plus interest/fees.
See All Answers