Huffington Post: Reverse Mortgage as Long-Term Care Solution
The crisis for long-term care in the U.S. has many Americans considering their retirement’s security. For some, the Huffington Post suggests reverse mortgages as a saving grace.
The Huffington Post reports:
“One study suggests that about 70 percent of seniors will need some type of long-term care, and most of the costs are not covered by Medicare. We aren’t talking about the costs for doctors and prescriptions, but rather care like nursing home stays, home health aides and the like.
A reverse mortgage enables a homeowner (at least 62 years of age) to draw income from the equity in their home while continuing to live there. The owner continues to be responsible for paying property taxes, homeowner’s insurance and for making property repairs. When the loan period is over, the owner (or their heirs) is responsible for paying back the loan amount plus interest. For individuals with few other options, a reverse mortgage can be an excellent way to finance long-term care costs. It has a lot of appeal for anyone who wants to stay in their home as long as possible.
Like any financial transaction, there are risks. If the money you have tapped runs out and you fail to pay your property taxes and insurance, then the bank can foreclose on your property. Most banks that offer reverse mortgages would rather have you repay the loan than end up with your house; but the banks will eventually get their money. Financial advisers also agree that money from a reverse mortgage should be used strictly to pay for costs of living and not be invested in other manners. Just as you shouldn’t borrow money to invest in the stock market, one shouldn’t use reverse mortgage payouts for similar investments.
Anyone past the age of 45 should develop a plan to pay for long-term care.”
Written by Jason Oliva