dnajaras Asked November 10, 2024
Reverse home mortgages, are they to allow the senior to stay in their home longer or do they exist to help pay for outside care?
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Are reverse home mortgages to help let the senior stay in their home longer if they desire or do they exist to pay assisted living, assisted living memory care, or long-term care in a facilty?
If the senior leaves the home, does the house immediately go on the market or does this depend on the language of the loan.
What is your experience?
Someone suggested doing a consultation with an real estate attorney especally one who focuses on deeds as an optoin. Sounds like a good idea I hope to pursue over the next couple of weeks.
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Additionally, because I have a LOT of equity in my home, I'm given a $120K line of credit I can use on whatever I'd like. If I don't use it, the LOC account builds interest. If I do use it, the account charges interest at current rates. The LOC amt I'm given is less than 1/4 of the equity I've accrued in my home, btw.
I'm 67 years old, and for me, this RM deal stinks. If I were 90 and wanting to stay in my home, maybe, Idk, plus the numbers would change.
And often quite a high interest rate as well.
So it works for some, as a senior, such as my MIL, would not be able to otherwise get any other kind of loan.
How nice to see you back again.
Regarding home mortgages, I am afraid it doesn't matter WHAT our own experience is because it will have utterly no relationship to YOUR OWN. Do you see what I mean. A reverse mortgage varies by company as to its rules and how it works, why it works, and if it works.
Some people love them and some hate them.
Since you asked for individual experience, here is my own:
My MIL lived in a very pricey, lovely town in AZ called Carefree. Highly prized (and priced) homes out in the desert. She had moved there when the town was first incorporated, land was cheap, and men sat in the bars laughing and naming the streets.
Her home appreciated wildly. Her husband died, leaving her no real monetary assets and she had never herself worked. So she had his SS, and that's it. She was what we call "house rich and cash poor".
She wanted very much to stay home her last years, watch her beloved havelinas and coyotes and rabbits and snakes visit the little pool she created from a dripping hose, drinking her vodka, and that's it. (That didn't come out right. The havelinas weren't drinking her vodka; SHE was!)
A reverse mortgage was the answer for her. It bumped up that monthly income to the point she could afford a housekeeper, a shopper, a companion when needed, and finally caregivers in her last months. Meanwhile she had a hospital bed moved to her room with a view. And there she passed.
My partner then went to AZ, sold her home, paid off the reverse mortgage and, as the only heir, pocketed the other proceeds after repayment.
For V. it worked and it worked well.
You are very correct about the language of the loan. Had V. chosen to leave the home and enter hospice or go to LTC she would have had to repay that "loan" which is what a reverse mortgage is "by the language of the loan" within quite a short time. She was lucky not to have to have ever 25/7 care until last days, or to need more than her monthly income provided.
So having or not having a reverse mortgage is a very individual choice.
I wish you luck in your own decisions.
As to reporting abuse here, I think abuse on this page is rare as hen's teeth. And I never saw a hen's tooth, actually.
Take care, glad to see you still thriving.
A reverse mortgage could cover in-home care expenses so long as the borrower remains living in the home. It could also cover expenses for a spouse in LTC, AL, etc. so long as the borrower (or co-borrower, if the loan is in both names) still lives in the home. However, if there is no spouse living in the home reverse mortgages cannot be used for nursing home expenses. The loan must be paid back if the person no longer lives in the home as their principal residence, meaning where they live for a majority of the year. The loan is to allow the person to remain at home, and if they move out for any reason the loan must be paid off, which would generally be by selling the house.
ask-cfpb/when-do-i-have-to-pay-back-a-reverse-mortgage-loan-en-236/
Another potential downside, depending on how much is being spent on in-home care, is that all the funds from the reverse mortgage could be expended and the loan would then become due--so the house would likely have to be sold to satisfy the loan and there might not be enough $$ left over to pay for LTC and the person would need to apply for Medicaid.
Igloo probably could explain this better and probably knows more, but this is what basically know about reversed mortgages. They are based on the equity on the home. When u qualify for the loan you only get a % of the equity, I read not more than 70%. This money can be used for daily living, my friend paid her mortgage off, it could be used to hire aides to care for the person.
If you need to place Mom in an AL, then her house would need to be sold to pay for her care if she has no assets otherwise.