Reverse Mortgage as Financial Tool

Reverse MortgageReverse Mortgage may be worth exploring for financially strapped seniors. Is your home the answer to financing your care in old age?  Maybe yes, Maybe no, as a Boomer, if the FONZ recommends a Reverse Mortgage, I might just look into it AAAYYY!

There is no debate that hiring an in-home caregiver is expensive. If you or your aging loved one is determined to remain at home rather than going into a Senior Residence when they need help with personal care or just day to day things like, shopping, cooking, driving, laundry, then there needs a way to pay for having an aide.

Apart from being financially well off, some options include Aid & Attendance or other Veteran’s Benefits, Community based care or other government programs. All of these require financial and other criteria to be met.

A Reverse Mortgage may be the answer for you and your family and at the very least can be explored. They have been around for decades, though only in the last few years have they been front and center along with AARP and Fall Prevention advertisements to Boomers and Seniors,.

They do involve some risks which must be considered, especially if the home in question is to be left to a family member. If your home qualifies, and it is the right decision for you and your spouse, then your home may be your ticket to long term care at home, as the bank will send monthly payments to you.  Do your homework!

!. Check whether your home/apt/condo qualifies for a Reverse Mortgage

  1. You must be 62 years or older.
  2.  You must live in the home and it must be your primary residence.
  3. There are no income or credit requirements.
  4. Funds are available in a lump sum, monthly payments or as a line of credit. — Do your homework re, each choice.
  5. As long as the money is spent in the same month it is gotten, it does not count as taxable income.

Remember, the Reverse Mortgage works ONLY as long as the person is living in the home as their primary residence. If you are looking for this income to cover Long Term Care costs, be very careful in planning. If your loved one is very ill or has a degenerative disease, physical or cognitive (dementia) and will require Assisted Living or Nursing Home Care- the mortgage MUST be paid back when they relocate. The house may need to be sold quickly or other funds used to pay off this mortgage.

The allure of monthly, tax free checks is very compelling but there are strings attached. Like any financial tool, there are risks with the rewards. A Reverse Mortgage is not for everyone, or every family.  If there is other money, then it can work out should the mortgage need to be paid off. Anyone whose condition is very likely to worsen over time – M.S. Parkinson Disease, Alzheimer’s Disease, forms of Cancer, COPD, etc. to where living at home with help is not viable, then a Reverse Mortgage isn’t a viable alternative either.

Get educated, explore the risks and talk to all family members involved.