Typically, elderly care can be expensive. If you have an elderly family member, it’s one of the concerns you have to think about as they age and experience physical and cognitive decline. No matter how independent they are when they’re young, it’ll still come to a point when you need adequate elderly care to improve their quality of life.
However, paying for the care your elderly loved one needs can be challenging if the family doesn’t have enough financial resources. This is where using reverse mortgages as payment for elderly care might make a lot of sense.
If you’re unfamiliar with this term, keep reading this article to learn more about reverse mortgages concerning elderly care payments.
What Is a Reverse Mortgage?
Essentially, a reverse mortgage refers to a type of loan allowing homeowners to borrow a certain amount of money against the value of their home to obtain cash to cope with the day-to-day elderly care. The lending institution can provide the funds in different options, including lump sum, a line of credit, monthly payments, or a combination of any of them. Although a reverse mortgage can be similar to a traditional mortgage, it may differ because the lender is the one paying money to the applicant-homeowner.
Moreover, in a reverse mortgage, the amount of money you can borrow from a lending institution may be calculated according to the value of the applicant’s home. Also, in most cases, the loan will become due and demandable after a certain period has lapsed or after the borrower’s passing.
However, if you want to understand better how a reverse mortgage can work efficiently, you can check out some reliable resource websites to get more valuable information. There are many organizations online that provide a support system for effective and transparent management of your older loved one’s financial affairs as they age. One of the solutions includes applying for reverse mortgages.
What Are The Eligibility Requirements for Reverse Mortgages?
For the elderly applicant to qualify for a reverse mortgage, specific eligibility requirements should be observed. These can include:
- The applicant-homeowner should be 62 years old or older
- They should fully own the home they’re living; if not, they should have paid a large amount of money in the original mortgage
- They should use their home as their primary residence, which means they should stay there for 12 months or more provided the loan doesn’t become due and demandable
- They shouldnt have delinquent debts under federal level
Given the qualification requirements mentioned above, your elderly loved one needs to meet them to obtain a reverse mortgage and use the funds as payment for elderly care.
When Can You Consider Reverse Mortgages Appropriate for Elderly Care?
Typically, many older people don’t have sufficient income to cover their care. This is one reason why they consider the financial resources associated with their homeownership as a solution. This is called a reverse mortgage. However, not all older adults require this type of mortgage, depending on their situation.
Below are the situations that may require reverse mortgages as payment for elderly care:
- Single Elderly People In Fair Health: Taking out a reverse mortgage may be necessary for single older individuals who don’t require immediate care and can still live independently in their homes. They can use the money from the mortgage to finance their long-term life insurance.
- Single People Needing Elderly Care: If an elderly requires immediate in-home care, a reverse mortgage can also be a good option. The funds can help cover the daily costs of taking care of elderly loved ones.
- Married Elderly People With One Spouse Or Both Needing Care: If both spouses or one of them requires elderly care, they can also get a reverse mortgage to access financial resources to fund in-home care expenses. The money they can borrow will allow them to live comfortably at home despite their age.
What Can You Expect from the Application Process?
When you and your older loved one decide to use a reverse mortgage as payment for their care, it’s also crucial to know what you should expect from the application process. Generally, applying for a reverse mortgage may take a fair amount of time, preferably four to eight weeks, for it to be processed. This can be because not all mortgage salespersons and representatives have the applicant’s best interests, making the entire process overwhelming.
But, if you want to familiarize yourself with the procedure and increase your odds of getting approval, the first thing to do is find a reputable mortgage lender in your area. You can browse the Internet for potential options or ask family and friends for referrals. Once you find the right lender, the government might require the borrower to speak to an approved mortgage counselor to help them explain the advantages and disadvantages of a reverse mortgage. That way, the borrower can make an educated decision before the application is processed.
The Bottom Line
At some point, your elderly family member may require care to ensure a better quality of life. Because of this, it’s best to prepare yourself and your loved one financially. Of course, for families who lack sufficient financial resources, one of the options is to get a reverse mortgage to cover the costs of elderly care.
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Scott J. says
No matter how you fund it, if possible it’s also a great idea to let your parents tour any home with you so they can see first hand what it has to offer instead of relying on word of mouth. When my sister moved our parents to a nursing home, my dad was very reluctant until he got a chance to really look around and find out what they had to offer. It made the move a lot easier for him.
Len Penzo says
Thanks for the tip, Scott.