Truth About Reverse Mortgages

For a very long period, one of my jobs involved working very closely with an investment planner and an aged judge. From all of them, I heard a lot. The most significant lesson I found is that it’s not just about choosing a nursing home or a home care provider for long-term care. Long-term care is often regarding the ethical and financial matters that nearly inevitably occur as people want to better create decisions about an elderly loved one.
Many people can not continue to compensate for nursing home treatment or in-home care individually for a very long period. Prior to retirement, something was not prepared for or budgeted for. Planning ahead is becoming increasingly commonplace, but for different reasons for our older generations, it was not a choice. You may find more details about this at www.ochousingnews.com/fed-buys-more-mortgages-to-keep-interest-rates-low/.
For this purpose, I try to make sure I know what all the financial choices are for seniors and representatives of their families. All of them is something not really well known by all of us—a reverse mortgage.
Most notably, reverse mortgages have gained a lot of attention. NBC Evening News, ABC, CBS… they all have stories going on. Of course, there are pros and cons of reversing mortgages, but oddly enough they are sponsored and endorsed by two major groups, especially for seniors who require long-term care. In some cases, the National Council on Aging and AARP also endorse the usage of reverse mortgages.
A research conducted by the National Council on Aging (NCOA) reveals that over 13 million Americans will utilize reverse mortgages to compensate for long-term care costs at home, helping them to remain independent and reside longer in their households.
The study sponsored by the Centers for Medicare and Medicaid Services and the Robert Wood Johnson Foundation, “Use Your Home to Stay at Home: Expanding the Use of Reverse Mortgages to Pay for Long Term Care” also demonstrates how reverse mortgages will relieve financial strain not just for individuals and households, but also for state Medicaid systems and the federal government. Through 2010, rising the demand for reverse mortgages could save Medicaid $3.3 billion annually (with a four percent take-up rate).
A home equity exchange mortgage is sometimes considered a reverse mortgage. The federal government backs these loans (HUD and FHA). The usage of this government service is eligible for people 62 and over. It is a “non-recourse loan” implying it is not the duty of the descendants of the seniors to repay the loan. In reality, a loan that does not have to be repaid is a reverse mortgage until all borrowers (assuming a couple) quit the house indefinitely or pass away. It does not include any recurring payments. The one that gets charged is the oldest.
Finally, it is tax exempt and would not compete with SSI or Medicare coverage with the funds retirees earn from a reverse mortgage.
There are other factors to remember, as in any financial deal, and reverse mortgages aren’t for everybody.
This might, though, be a life saver for the aged or couple who are having difficulty making ends meet.
Many retirees use the additional cash flow to compensate for in-home treatment, day care for adults, pay for prescription medications, pay down credit card debt, and make much-needed home renovations so they can live more easily and healthy.
Find, and network with a reverse mortgage specialist in your area. They may be willing to assist a senior that you realize is paying for treatment privately much longer than planned.