One of the benefits of a Reverse Mortgage is that it can be a very powerful tool that provides retirees the financial independence and mobility to help themselves and their families plan and pay for at home care, on their own terms, in retirement. There are an abundance of quality home care options available. Whether it be basic care, skilled care, or even dentistry or imaging procedures, quality care for seniors is available in your home. The most efficient and affordable method and place for care, health permitting, is often seen as in your home versus relinquishing your residence and making a major lifestyle change to a care facility. Having said that, paying for care and planning for expected care needs is important to maintain comfort and lifestyle as we age. Many seniors do not have the income or savings to pay for personal care, home modifications to age in place or long term care insurance but do have financial resources in the form of equity in their home and this is where a Reverse Mortgage can help.
How can a Reverse Mortgage help pay for Home Care Solutions?
- Balancing Mandatory Debt to Fixed Income: Mandatory debt is the number one factor in most cases that consumes a large portion of a retirees fixed income on a monthly basis. A simple maneuver to pay off or literally swap out an existing forward mortgage that requires a mandatory monthly payment for a new HECM Reverse Mortgage that does not require the same payment instantly creates monthly cash flow for living expense.
- Supplementing Income: For eligible homeowners with sufficient home equity, a Reverse Mortgage can be used to supplement current fixed income in three distinctive ways after paying off any existing forward mortgages that may exist.
- HECM Line of Credit - A unique credit line that provides annual growth in your available credit can be tailored with your remaining eligible home equity. Any unused portion of your eligible home equity will grow and compound annually at approximately 5.0-6.0%. This is referred to as the growth factor. Many people may are able to follow a very conservative path with their home equity will choose to only spend the growth of their credit line annually so as not to disturb the principal that can be kept available for real emergencies or as care needs escalate.
- Term Payment - This is another means, in lieu of the credit line, of configuring your residual eligible home equity after any mortgages are paid off. Term payments of five, ten, or fifteen years etc. can be configured to match your expected expense needs for supplementing income and helping plan and pay for care. The shorter the term the higher the monthly payment, so if you have high immediate needs you can effectively plan with a term payment to match your expected needs. This will provide you higher monthly advances as compared to a life expectancy time table.
- Tenured Payment - This is another option, in lieu of the credit line, of configuring your eligible home equity. This option is quite unique in that it will cast an annuity-like payment for the rest of your life and the full life of your surviving spouse. These funds can be used to supplement retirement income and plan for care. This option is best selected when the primary goal is to supplement current fixed income so monthly expenses can be managed more easily.
It is important to note that these options are very flexible. The only mandatory option at the closing of a HECM Reverse Mortgage is to pay off any current mortgages or liens on the property. When the need for care or additional planning becomes eminent, you will have a government insured vehicle, in the form of a HECM Reverse Mortgage, in place at your disposal to access your home equity as needed. Contact one of our Reverse Mortgage Specialists today to learn more about how to pay for in home care for yourself or a loved one with the benefit of a Reverse Mortgage.