Can a Reverse Mortgage Loan Pay for my Parent’s Long-term Healthcare Costs? That Depends…
Did you know that an estimated 47% of men and 58% of women age 65 and older will need some type of long-term care in their lifetime? Seventy-seven percent would prefer to receive care at home, rather than at traditional long-term care facilities or convalescent homes. While some insurance policies may help chip away at the cost, paying for at-home care, assisted living or nursing home care may seem overwhelming — especially to adult children who are likely to serve as caregivers at some point.
If your loved ones are in or nearing retirement and hoping to age safely in place, reverse mortgages can be a source of funds to help cover the cost of in-home care. Designed for homeowners age 62 and older, this increasingly popular loan option allows borrowers to tap into the equity built up in their home, all while living in it and retaining ownership. ** The proceeds may be used as they wish to pay for in-home care, supplement a retirement income, make home renovations or even purchase a new home to better fit their changing needs. Funds can be accessed as a lump sum, monthly payments, or a standby line of credit that grows*** when left untouched. *
When reverse mortgages are most advantageous
Could your parents or loved ones make safety modifications to remain in their current home as long as possible? Does anyone have a condition that will require ongoing care in the near future? Depending on the situation, a reverse mortgage loan after retirement may be able to cover some or all of the financial burden. Here are a few scenarios:
- Retired individuals and couples in fair health. For single and married retirees not in need of immediate care, the proceeds from a reverse mortgage can be used to help cover the cost of in-home care, purchase long-term care insurance and/or to modify their home, making it safer and more comfortable for the years ahead.
- Retired individuals requiring care. A reverse mortgage may be an option to help pay for in-home care, but only as long as their condition and finances can handle it. If a parent’s health eventually requires a nursing home or assisted living facility, a reverse mortgage might not be the best option. Under the terms of the loan, their home must typically be the primary residence.
- Married couples with one spouse needing care. If a parent’s health requires them to move into a care facility, a reverse mortgage can help cover the expenses, as long as your other parent (and co-borrower or eligible non-borrowing spouse) remains in the home. If the parent receiving care passes away, the remaining co-borrower or eligible non-borrowing spuse continue to live in and own the home**. Couples should consider including both partners on the loan as a means of extra protection for a widowed or displaced spouse.
- Married couples with both spouses needing care. When both of your parents require special care, a reverse mortgage can be used to cover the cost of in-home services. But if nursing home care is needed, reverse mortgages must be repaid when the last borrower or eligible non-borrower spouse moves from the home or passes away, as described above.
Before deciding on a reverse mortgage or another financial solution, be sure to speak with a financial advisor to help determine the best payment options for long-term financial security.
Aging well means living well
With a reverse mortgage loan, your loved ones can use the funds to live their best life now, while planning for the years ahead. Find out how a reverse mortgage can help them stay in their home well into the future by visiting our website today. ****
This content is sponsored by RMF, one of the nation’s leading reverse mortgage lenders. We are dedicated to helping older Americans retire more freely, in the comfort of their own homes. As a result of our commitment to providing an extraordinary and positive customer experience, we have earned a 98% customer satisfaction rating; a 4.8-star / Excellent score on Trustpilot; 4.8 out of 5 stars on LendingTree; and an A+ rating with the Better Business Bureau. Call 888-277-1567 to speak with a licensed reverse mortgage specialist to learn about our retirement financing products and solutions.
* Borrowers who elect a fixed rate loan will receive a single disbursement lump sum payment. Other payment options are available only for adjustable-rate mortgages.
**As with any mortgage, you must meet your loan obligations, keeping current with property taxes, insurance and maintenance.
***If part of your loan is held in a line of credit upon which you may draw, then the unused portion of the line of credit will grow in size each month. The growth rate is equal to the sum of the interest rate plus the annual mortgage insurance premium rate being charged on your loan.
**** As with any mortgage, you must meet your loan obligations, keeping current with property taxes, insurance and keeping your home in good condition.
SEE WHAT FUNDS YOU MAY HAVE AVAILABLE
If you have equity in your home and believe you meet the eligibility requirements, a HECM may be the option that could help you retire smart.