As the Baby Boomer generation continues to age, more and more seniors are finding themselves facing a harsh reality: they didn’t adequately plan financially for their later years. Sure they saved enough to retire, pay the bills, and travel. However, there is a potential financial drain waiting towards the end of their lives that they just did not see coming—the need for long term care. Long term care options include how to finance these services.
Perhaps this is where you find yourself now. Maybe your spouse has suffered a debilitating fall and you need a home health aide to assist you in caring for them. Or perhaps you are an adult child placed in the position of caretaker for your ailing parent and know that in-home care is the only way you can take care of them and still continue to work your full-time job. Whatever the case, the fact remains: you need to find a way to pay for the long-term healthcare that the disabled elder in your life needs.
For some seniors, a reverse mortgage represents a viable option for funding long term health care. Now don’t confuse a reverse mortgage for a home equity loan because there is a major difference. While a home equity loan requires you to pay back the cash you receive with interest, a reverse mortgage does not. Basically it allows you to enjoy the value of your home now while still being able to live in it and not make any payments.
And in the case of a senior in need of assistance funding long term care, the cash advance can be a true lifesaver.
Now you’re probably wondering, what’s the catch?
Well, there are a few rules. You must be at least 62 years of age. You also have to own and live in the home as a primary residence. In the event that the home is no longer used as the primary residence–whether because of a move, sale, or death–the loan must be paid back. Never before. At that point, if the sale of your home equals more than you owe on the reverse mortgage, the excess goes to you or your estate in the event of your death.
Scared your home won’t sell for enough to pay off the reverse mortgage? Don’t be. The repayment of your loan can never be greater than the sales price of the home.
If you need help funding long-term care, a reverse mortgage might be the best option available to you, but there are other options out there too. Our advice? Speak to a financial professional about your individual situation and see if it’s the right move for you and your family.