Posts Tagged ‘reverse mortgage’

How to Pay for Senior Care in Indianapolis

Tuesday, February 2nd, 2010

Seniors want to stay in their homes rather than go to a nursing home but it is often difficult because of the cost of in-home care.  It is essential to pre-plan so that you have the resources to make this happen.  Here are the common ways to pay for senior care in the Indianapolis area.

1.    Privately paying for care in means paying for care out of your own income, investments, savings and assets.  

2.    Long-term care insurance will help pay for in-home care, assisted living, and nursing home care. This is the most appropriate and needed form of insurance protection available to us today. Long-term care insurance should be termed “lifestyle” insurance (it’s NOT just nursing home insurance!). If your vision of your later years includes sitting at home in your own recliner, with your own remote control, watching your own TV….well, you should be planning for that future with long-term care insurance.

3.    Reverse mortgages (Home Equity Conversion Mortgages) have become one of the most popular and accepted way of paying for many different expenses, including the cost of long-term care. Reverse mortgages are designed to keep seniors at home longer. A reverse mortgage can pay for in-home care, home repair, home modification, and any other need a senior may have.  Reverse Mortgage Companies 

4.    VA Aid and Attendance Pension Benefit: The Veterans Administration has established a pension program whereby your purchase of personal care and attendant home services may be paid for through your acquired pension. If you are a Veteran or the surviving spouse of a Veteran who has served at least 90 days or more on active duty with one day beginning or ending during a period of war, and you are in need of assistance at home or in an assisted living due to your disabilities, you may be eligible for VA’s non-service connected disability pension.    The benefit pays from $1056-$1949 per month tax free for life.  See a Veterans Benefits Consultant.

5.  Life Insurance:  Some insurance companies offer long term care additional riders for life insurance policies. Other options may enable you to use your life insurance policy to help pay for long term care. Accelerated death benefits and viatical settlements (selling your policy to a third party) provide payments lower than the full value of the policy, but can make sense for those who are terminally ill or in poor health. A life settlement essentially sells your life insurance policy for its present value—often a wise choice for those who no longer need or want a policy.

6.  Long Term Care Annuity:   An annuity is a series of regular payments over a specified and defined period of time. The funds for the annuity come from a single premium payment that you make when establishing the account. There are two types of annuities: deferred and immediate.  A deferred annuity includes two funds. The interest-bearing long term care fund is used to pay for long term care services and insurance. The cash fund grows at a guaranteed rate of 3 percent. The monthly amount depends upon the annuity value and generally provides coverage for up to 3 years.  An immediate annuity  also provides long term care coverage. This generally requires completing a medical questionnaire the insurance company uses to determine the price and length of payouts. Once you pay a single premium payment, you are guaranteed a monthly income for the rest of your life.

7.    Government assistance is available but in very limited supply. The Central Indiana Council on Aging administers the state and federal available in-home assistance.  They offer meal delivery, transportation, homemaker services and attendant care.   The CHOICE program allows you to hire your adult child to be your caregiver and they get paid after completing their certification program.  Not all in-home services are based on your income.  Most seniors make above the allowable limit to qualify for Medicaid while in their home and need a little assistance.  Currently the Medicaid system only provides nursing home care when someone needs 24 hour care.   If you need nursing home care you can apply for Medicaid but first consult a Medicaid Planning Expert such as Aging Avenues.

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Not Your Grandmas Reverse Mortgage Anymore

Monday, July 20th, 2009

Many people don’t realize that Reverse Mortgages have been around since 1961. While I have heard several companies take credit for doing the first reverse mortgage, I believe the first one was done in New Jersey. The lady not only outlived her reverse mortgage loan but she also outlived her loan officer. The original reverse mortgages did not have much protection for the senior.

Over the years, several safeguards have been put into place. One of those safeguards is the requirement that all reverse mortgage applicants go through counseling. The reverse mortgage (called a HECM Home Equity Conversion Mortgage) is an FHA or government insured loan. FHA wants the counseling to be done through a third party agent who has no financial ties to that loan. While this may seem a bit paternalistic, it’s a really good idea. This gives the senior another opportunity to ask questions and to hear about how the loan works. In many cases, the senior can bring their adult children or other financial adviser to their counseling appointment. It’s important that seniors also look at any options they may have and counselors assist in that process. The counseling takes about 45 min to an hour and in most cases it is be done over the phone. Some counseling can be done in person as well. As of August 2008, Counseling Agencies may now charge for their services. There are, however, some agencies who can waive their fee ($125) for seniors who are financially unable to pay. Always ask your counselor about this option. Once the counseling is done, the senior will receive a certificate of completion and this certificate is required before the lender can order an appraisal on the property.

Another safeguard, is the mortgage insurance premium (MIP). While this insurance is added to the costs of the loan, it’s invaluable in protecting seniors and their families. This insurance means that the senior can never owe more than the property is worth. If that were to happen, the lender would simply make a claim against that insurance for any loss and the lender would never go after the senior or their heirs for that difference. This means that the senior will not ever leave a debt for their family. This is very important to the majority of reverse mortgage customers.

A third safeguard is the maximum age. The original reverse mortgages stopped at age 100 but today, the reverse mortgage is good until age 125 or until the senior permanently vacates the property (after one year), whichever comes first. We haven’t had any seniors reach 125 yet!

A more recent addition to the reverse mortgage program is the addition of fixed rate reverse mortgage products. In the past, all reverse mortgages were adjustable rate loans. Fixed rate loans today, provide the customer with the maximum amount of loan when compared to the adjustable loan. This can change as interest rates go up and down but currently, the fixed rate does afford the maximum proceeds from the loan amount. While adjustable rate loans may still be viable for some seniors, it’s nice to have the option to choose from. If you still have questions about the safeguards available with the reverse mortgages today, talk to your reverse mortgage specialist. He or she will be happy to fill you in on all the details of this wonderful product.
Brenda Wheeler, Reverse Mortgage Specialist, M & I Bank Indianapolis
To learn more about this and other senior care funding options go to www.agingavenues.com or call 317-731-3315.

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