Reverse Mortgages–Part 1

Introduction to Reverse Mortgages from an eldercare perspective.

Elders often struggle to find the resources to stay out of nursing homes, and stay in their home, but still need in-home care. A reverse mortgage can be used to help make that happen.

Medicaid can be used to pay for nursing home care, but stay at home care can be difficult under Medicaid.

A reverse mortgage is not a panacea and should be evaluated with the help of an elder care attorney or elder care financial advisor.

What is a reverse mortgage?

A reverse mortgage is a loan designed specifically for elders (62 years of age or older) to take money out of their home either in payments, in a lump sum, as a credit line, or as any combination of the three.

Repayment of a Reverse Mortgage

A Reverse mortgage is a LOAN, and that loan has to be repaid.

The loans do not have to be repaid until any of the following 3 events occur.

1. the last surviving borrower dies.

2. the home is sold.

3. the borrower moves out permanently.

What is the purpose of the Reverse Mortgage?

One must never forget that the first purpose of any financial instrument, is to make money for the lender.

The intention or motivation for a reverse mortgage was to give seniors that were real estate rich, but cash flow disadvantaged, fast and easy access to the equity in their home for any purpose, including home based elder care.

 

to be continued….