My mom's has had a 24/7 caregiver so her savings account is running out and I have to find more money. I'm looking into a reverse mortgage, but the fee's are high. Has anyone used a reverse mortgage? If so, please share your experiences, good and bad.
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I recently saw someone post the question on Nextdoor.com ("Are reverse mortgages a good idea?") and there were innumerable responses (60+ and counting), most of them were emphatic "no" and a few were "it depends". None were "yes, they're great". Don't do one unless you know exactly what the consequences will be.
Why not just sell her house?
This worked very well for my partner's mom who wanted to stay in her own home with her own visiting caregivers. She was able to do so by the amount monthly she was given and the amount she had saved added to her SS. She managed to die at home.
The home was eventually then sold by her son, and the mortgage loan for the reverse mortgage paid off (they generally have quite high interest). Essentially these are loans on the home.
The problem occurs often in THIS screnario:
1. Senior becomes way too ill to be home even with one on one caregiver (which requires more money than a reverse mortgage will give.
2. Senior leaves home to enter care.
3. Because Senior now has SS AND funds monthly for reverse mortgage she may be too high in monthly income to easily qualify for medicaid.
4. Now that the senior has left the home and cannot return the reverse mortgage "loan" is almost immediately called and due to be paid.
5. Home is sold; reverse mortgage loan is paid. Senior remains in care with remains of sale of home.
This as I said works for some and is a real bad choice for others.
You need to find out WHICH
And only an expert can help you decide.
Good luck.
I have represented people who have done that and not in one case was the outcome good. Seniors who could no longer sustain living in their home and had to go to a facility, having spent what they received from the reverse mortgage and thus left with nothing for their care.
Costs and interest rates are high, I would look for a different alternative.
Sell the house, then use the proceeds to pay for care. Easy and simple.
This is an "it all depends" (see my note below), and is something, like LTC insurance and irrevocable trust to approach CAREFULLY and with expert advice. It is something that, if you go about it unknowingly, may have an enormous and "unfixable" cost.
@ SouthernWaver
So very rare that I disagree with you, SouthernWaver. But here I do. Never say never. Read my post below. It worked marvelously well for my partner's mom when she was VERY house RICH and very CASH POOR. It allowed her to stay in her Carefree AZ home where she could have her bed by the window looking out at the little desert pool she created for wildlife, getting checked on daily for a few hours. She was thrilled. Partner was thrilled. And she got to die at home as she wished.
In general, along with irrevocable trust, I don't like Reverse Mortgages. In general, along with a FEW things like LTC insurance I think you need really great advice. But I don't think we can blanket statement condemn then when they work so well for some. I have personal experience on this one.
My Dad was finding trying to maintain his house was getting to be too much for him, as he was the type that wanted to do things himself, but being in his mid 90's, he couldn't anymore. He loved having his caregivers but it was becoming quite expensive. At senior living he had a nice apartment for $5,000 per month. He had weekly housekeeping and linen service, meals in the restaurant style dining room, activities, cable TV for the first time ever (never had it at home), and if anything needed fixing he just dialed maintenance dept. Oh, he brought along one of his caregivers to help him from 7 a.m. to 1 p.m. This gave him a routine that needed.
Dad sold his house and used the equity for his apartment rent at senior living facility, and to pay for his morning caregiver. He put the vast amount from the sale into investments which helped his savings grow. No more worries about property taxes, utility bills, lawn mowing, shoveling snow in the driveway... he really liked having this freedom at his stage of life :)
In general, along with irrevocable trust, I don't like Reverse Mortgages. In general, along with a FEW things like LTC insurance I think you need really great advice. But I don't think we can blanket statement condemn then when they work so well for some. I have personal experience on this one.
Would I tell others to do it? Yes, if there is no other option AND you take time to plan ahead for when the money runs out. Do realize that if you don't pay back the reverse mortgage before trying to sell, it will make the sales process much more complicated. I am so glad to be out from under the reverse mortgage but glad that it carried us through for four years.
When my boss's wife had passed, the RM wanted their money back immediately. He could no longer stay in the family home which he and the grown children had loved. He was forced to sell so the RM loan could be paid. It was within days after the funeral that he had to put the house up for sale.
Back then, RM wouldn't let the remaining spouse continue to live in the house, even if the spouse was able to maintain the cost of staying (which my boss could easily do). Thank goodness that rule no longer applies with today's reverse mortgages. If he was allowed to stay, the house would have grown in equity to give him funds for his own retirement.
Thus, read the fine print.