Reverse Mortgages

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For some families, a reverse mortgage could be a good way to generate funds for in-home care, assisted living, home modifications, and other important care needs.

Many seniors and their families find that while they’re not in a position to pay for senior care expenses with personal savings, they do have financial resources tied up in their home’s equity.

A reverse mortgage is a loan that allows you to collect cash against the value of your home without needing to sell it. You can choose whether you want these funds paid to you in consistent monthly installments or as a lump sum amount. There are no restrictions on how you can use the funds from a reverse mortgage. Because you continue to live in your home and retain title and ownership of it, you’re still responsible for taxes, insurance, and home repairs.

However, you don’t have to repay the loan for as long as you live in the home. Instead, the loan will need to be repaid when the borrower passes away, sells the home or permanently moves out.

Although there are several types of reverse mortgages, the Home Equity Conversion Mortgage (HECM) is the only one relevant to families needing to pay for senior care. HECMs are backed and regulated by the Federal Housing Administration (FHA), which protects you if the lender fails. It also means that when it’s time to repay the loan, you’ll never owe more than the value of the house.

To qualify for a reverse mortgage, a homeowner must:

  • Be aged 62 or older
  • Own their home outright or have at least 50% equity
  • Live in the home as their primary residence
  • Not be delinquent on any federal debt

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