One of the many questions that we get from health care professionals or a friend or family member looking for care for their loved one is whether or not a Reverse Mortgage can help to pay for the cost of Homecare without affecting Social Security or Medicare benefits eligibility. The answer is Yes! If you don’t know much about reverse mortgages please see below.
What is a Reverse Mortgage?
A Reverse Mortgage, otherwise known as a Home Equity Conversion Mortgage (HECM), is a federally-insured FHA Home Loan that allows seniors age 62 or older, to convert a portion of their home equity into tax-free cash without having to make a monthly mortgage payment
What are the Benefits of a Reverse Mortgage?
- Tax free cash to pay off your mortgage and more
- No minimum credit score
- You (not the bank) continue to own your home during loan life
- Government insured = low risk
- No restrictions on how you spend net proceeds
- Generally, repayment of the loan is capped at the home value
- Typically does not affect Social Security or Medicare benefit eligibility
- No monthly loan payments
How Do I Know If I am Eligible?
- Must be aged 62 or older
- Have sufficient equity in your home
- Must pay off existing mortgage with loan proceeds and/or other cash
- Eligible home types:
- Single family home
- Approved condos
- 2-4 unit owner-occupied residences
- Some manufactured homes
What Are My Disbursement Options?
- Lump sum
- Monthly payments (term or tenure)
- Credit line
- Combination of all the above
When Do I Have To Repay The Loan?
- You sell your home
- You vacate your home for more than 12 months (medical or other reasons)
- The last borrower on the title passes away
- You fail to pay property taxes or homeowners insurance
- You do not maintain the home according to FHA requirements or fail to meet other loan obligations
Contact us for further questions on how you can use a reverse mortgage to cover the cost of keeping your loved one at home (860) 373-0428.