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Reverse Mortgages
Getting a reverse mortgage is worth considering when it comes to paying for care. Reverse mortgage loans enable persons age 62 years and older to convert part of the equity in their homes into income without having to sell the home, give up the title or take on a new monthly mortgage payment. The reverse mortgage is aptly named because the payment stream is "reversed". Instead of making monthly payments to a lender, as with a regular mortgage, a reverse mortgage lender makes payments to you. Most reverse mortgages are backed by the federal government through FHA. All borrowers must attend a free educational session conducted by a trained counselor.
You can choose how to receive the money from a reverse mortgage
- All at once, as a lump sum
- Fixed monthly payments for a set term or as long as you own the home
- Line of credit, which is most common, allows you to draw proceeds any time
You can use the proceeds from a reverse mortgage for anything - supplement your retirement income, repair or modify your home, pay for health care, pay off existing debt, take a trip or have cash available for an emergency. Using the equity from your home is a good way to pay for senior care and stay at home as long as possible. If you later need to apply for Medicaid their would be no equity left for them to attach a lein to. You can usually borrow up to your age minus 10 in equity from your home when getting a reverse mortgage. There are closing fees involved in a reverse mortgage much like a refinance.
The reverse mortgage loan is repaid when the home is sold. The amount owed typically includes the amount borrowed to date, the amount of interest accrued, mortgage insurance premiums accrued, servicing fees and any other costs financed as part of the loan. If your home sells for more than owed on the reverse mortgage the excess money goes to you or your estate. If it sells for less than is owed on the reverse mortgage the family owes nothing more than the amount of the mortgage. The reverse mortgage is due when you no longer intend to return to your home so if you intend to leave your home within 2-3 years there may be other options to consider.
Since reverse mortgage loans are now governed by FHA there is no reason to be afraid of them. They are not the reverse mortgage loans of the 1980's.
Aging Avenues can help you determine if this is your best option to pay for care in Indianapolis, Greenwood, Carmel, Fishers, Avon, Brownsburg, Franklin, Beech Grove, Noblesville, Shelbyville, Danville, Plainfield, Speedway, Lawrence, Lebanon, Zionsville, Greenfield or Mooresville. Check out our Preferred Reverse Mortgage Companies.
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