we're having a "family meeting" tomorrow to talk about what to do if we have to put DH into a facility - I hope not, he's still very placid here (if noisy - think little boy with toy car) and I still can handle him, but I want to raise the possibilities. I've talked to an eldercare lawyer, gotten stuff in place and know what would be involved as far as medicaid is concerned.
Our house has been in my name for three years and has no mortgage; I own it free and clear. Our daughter lives with us (can be considered a caregiving child for me or for my husband) and has a full time but low paying job. She would not be able to afford to live on her own easily. One of my sons has indicated that he thinks I should get a reverse mortgage on the house to pay for n.h. care. I have designated her as the recipient of the house after my death... I really am resistant to the idea of a reverse mortgage in this case.
I would be very careful about reverse mortgages. The out-front fees are horrendous; you have to go through a counseling course, etc. Closing takes forever. You still have to pay your property taxes and maintain the home. At your death, whatever amount was originally given to you will have to either be repaid by your heirs; or the bank can sell it and get repaid that way. Be sure to get some GOOD ADVICE from a top-notch real estate attorney who deals with this type of mortgage.
I would apply to Medicaid, but before you do talk to an elder law attorney, they can move assets into your name using a designated trust for you. This can help you to meet the requirements on the financial side of things.
If would have to know the total expense for the NH before taking out a reverse mortgage which you don't since you don't know how long he will live. My dad lived in Oregon and when he went into the nursing home after a stroke, the state paid his expenses but also put a lien on his house for the amount. I do not know if it was the whole amount or not, but my stepmom was allowed to live in the house as long as she wanted. She eventually sold the house at which time the state took their money and she got the balance. She could have stayed until her death but she had another house she moved back to.
If you should consider a reverse mortgage make sure you get a fixed rate. My sister got one and she had the adjustable. It has only been 4 years and they have eaten up her equity - as far as the law will let them go. Evidently they can not go over the value the county has it frozen at. That is good for her.
I would explore it but leave reverse mortgage as a last resort.
I would be really careful about that reverse mortgage idea. Talk to an eldercare attorney. Basically, if you own the house in your own name, and have done so long enough for the look back periods, the state can't put a lien on it for your husband's care.
I can't remember hearing good things about the reverse mortgage but I don't think I would want one. Unless your home is very valuable the expense of NH plus the upkeep and utilities at the house would soon eat up all of the money. I am thinking of how much it will cost if I have to place my husband. Not only will I have the $60,000 or so a year for his NH costs I will still have the same amount of bills here at the house for me. My fire Insurance is $800. a year, plus other Insurances, utilities, eating, clothing, etc. Basically the same as what it is costing now for both of us to live here. A place like Joan has sounds better all the time. No property taxes, utilities, Insurance, upkeep etc. I don't know about your state briegull, but in WV, as I understand it they won't take your home, however, your situation may be different in your state. I know, also, you have your daughter to consider. Better minds than mine need to figure out your situation. Good Luck and I hope you find a good answer to your situation.
In certain cases, I understand that a reverse mortgage can be a good thing. But basically, since you want to leave the house to your daughter, I don't think it would be the best solution. I agree that you need to look into the Medicaid rules in your state, to try to preserve the house as an inheritance for your daughter.
No they won't take my home, and yes, I have seen an eldercare lawyer. Here, the cost of the one nursing home (actually Alz unit "assisted living" but they're pretty far along) is $6650/month. Well over $60,000/yr. The house might in the old market have been worth $300,000. Probably not that much now. SO the whole value of the house would disappear in three-four yeaars! NO THANK YOU!!! Better just bite my pride and go for medicaid.
I hope Jane responds soon. I would be very cautious about a reverse morgage. It seems to me that you can get assistance in getting his care without you losing your home over the years.
I would keep that home. You need somewhere to live for the rest of your life. Let medicaid pay for his care. They have spousal impoverishment laws in my state I don't know about yours. He could live a long time and there would be no equity left.
briegull, I just now read this thread. NO do not go for a reverse mortgage. In one example they will not even give you full value of your home, only maybe half, they go by your age. The reverse mortgage fees are high. Your home is safe, let Medicaid pay that is what it is there for.
We had a good discussion, my sons and I, this past T'giving. I explained all I'd learned about Medicaid and I think they actually finally realized I knew more about something than THEY did!!! They seemed to be in agreement about everything. (One son has a wife with insurance that might possibly provide some long term care help for her spouse's parents.. I doubt it, but I'll look at the materials)
We are also going to have a 'family' meeting at some point after the holidays etc. I've consulted with one lawyer..then an ELDER law attorney who had no interest in helping unless there was something legally he could do and he said he couldn't..we didn't QUALIFY.
Jane, I've read as much as I can. It seems that AFTER DH is placed there is something called the financial snapshot (?) at which time the assets and etc. are listed and at that time something could possibly be done??? to prevent spousal impoverishment?? Does that even sound right?
I do hope to be able to SELL our home to our son, who lives nearby and would be the most likely family member to want to live here. He lives nearby anyway and needs a larger home. That might provide income for another house or apt. closer to a facility. The closest possibility is 40 miles away. Our daughters have found another in the Houston area that they believe is THE one.. and both live within 10/20 minutes of that one. So no reverse mortgages here but thats about all I know for sure at this point. If we can just get to some workable plan..and then be able to 'work the plan'..that will be a huge relief.
Reverse mortgages aren't always the best answer Tuesday, December 08, 2009
Q: We are 75 and 69. Our financial situation is good. We live in a controlled senior citizen environment.
We have a $100,000 mortgage on a $200,000 home. Our payment is less than $600 a month. We know people are jumping on the reverse mortgage concept. I am sure that some do this for the right reasons and some for the simple cash flow advantages the concept provides.
But down the road, homeowners walk away, and no value is left in their home for the survivors or those who expect some inheritance.
With the economy as it is, home values may never be what they have been in the past. Does it make sense to have a reverse mortgage now, or is there something in that process we are not seeing?
— P.H., Sun City
A: In recent years, reverse mortgages have become better deals than they once were. Expenses have come down. That's the good news.
A reverse mortgage is an improved option for those who would really benefit from having one. The real question, however, is: Who would really benefit from having a reverse mortgage?
Most of the people interested in getting a reverse mortgage have little or nothing in financial assets. They need the money to continue living in their house. This means they are massively "house poor." It means they are probably spending a very large portion of their income on the cost of operating their home. It means they are shortchanging almost everything else in their lives to stay in their home.
That's why I think most of the people who are thinking about getting a reverse mortgage would do better to think about selling their home and buying or renting a more affordable place.
Although people often have great sentimental attachments to their homes (and equally great fear of change), the most common end result is a poorly maintained home. Worse, the homeowner is trapped because he doesn't have money to do anything but stay at home.
Although it may be nice to stay in a home you've lived in for many years, a better exercise would be to make a list of all the opportunities that are being forgone because of being house poor.
For you, a reverse mortgage would not be enough to pay off your existing mortgage, but it would provide a monthly payment almost large enough to cover your mortgage payment.
If anyone thinks that reverse mortgages were created to help you financially, please remember that they are charging you dearly for the service, and the true costs are often unclear. The primary goal of reverse mortgages is to earn money, and you can be quite certain that they are making a profit from the transaction. It is not a charity, but a way to squeeze some financial dollars from desperate people, under the guise of actually doing them a favor and helping them....Buyer beware.... I wonder if reverse mortgages last as long as the regular mortgages....and when the reverse morgage ends, does that mean that you burn the house down? I have heard of people burning their morgages...wonder if the opposite is also true.
Judy, Yes, the more you have at the snapshot date the more you will be allowed to keep as a spouse. The snapshot is the first date of admission to a facility where there is no break in service for 30 days. It can be a combination of hospital, NH, Hospice in patient, etc. You will get to keep the home. IF you sell your home to your son you HAVE to charge him the full market value, anything under that amount would be considered a gift by Medicaid and therefore cause a penalty period beginning with the day your spouse qualifies, that would cause you really not to qualify at all unless the amount was paid back to you. IF you sell him the home for full market value then you Must put that amount back into another home of equal or higher value in order to keep the home uncountable. Now if the home is in your name only,. AFTER and only AFTER you husband qualifies for Medicaid then you could sell the home to your son and not purchase another home if you did not want to.
Once Medicaid determines the snapshot date, they will then look at the total countable assets as the first day that starts and that is what they will go by. The snapshot date can even be years before you apply for Medicaid if there has been a 30 day stay.
When you start to apply if you extra money they require you to spend down ask about the spousal annuity.
I AM a real estate broker and continuously receive publications weekly with often discuss the pros and cons of REVERSE MORTGAGES and I can attest that the current programs are MUCH different that the earlier ones. Just as the new real estate mortgage programs are different and borrower qualifications have changed, (one cannot borrow whatever they want on a home providing they pay 20% down (no doc loans). I KNOW that Reverse Mortgage programs include an appraisal of your home by an independent appraiser, ...and one cannot borrow back the fulll value of their home...Diffierent companies have different limits...most will lend up to 50%-60% of the current appraised value..the remaining equity remains YOURS. IF any of you are in the mortgage business, speak up.... Just as reporters will write about new Alzheimer's Cures we KNOW are bogus, they write about other things with a minimum of knowlege, perhaps received from only one source. Talk to bankers, mortgage lenders, - they KNOW their business. Don't be guided by what a friend's brother in law's neighbor told them. Just know this: You will not lose your home if you elect to go the Reverse Mortgage route and know that you cannot borrow 100% of its current value ( becaues values rise and drop), the bank cannot foreclose on you as long as YOU live in the home, and they have a lien against the home. They MUST be sold after the deed holder dies, to pay back the banks. These are best used by those of us who have paid off their homes but cannot afford the maintenance, taxes, insurance etc. of the house. This program is sound.
I do NOT know what impact it would have on those applying for or trying to get around Medicaide requirements, that's a different subject all together. DO NOT mix up the two subjects.
Some of us choose to keep our LO at home until the end.., and this program could afford a way to bring n nursing/aide help his last year or so where otherwise, you could not afford this expense. Again, it's for those NOT eligible for Medicaide due to a pension income, but still could not afford the $2500+ EXTRA each month for in home nursing care.
I only ask you keep this in context. It saved MY widowed friend who could not sell her home in this horrific real estate market, and who had lost most of her IRA when the market crashed. All she had was a very large home she owned free and clear. (She was not a Alzheimer spouse..she's 80 years old, active and in excellent health) I SEE it working beautifully for her...- she will be ok the rest of her life, thanks to this reverse mortgage program. This I kNOW!
What sets the Reverse Mortgage Loan Progam apart from simply borrowing against the equity in your home is that there are no payments due until after you die. There is interest charged, but not to exceed the current market rate, which is currently around 4.5-5% per annum.
You are so right Nancy B. I've been in the title insurance, mortgage and real estate closings for over 30 years, and I too know this is a good deal for some. Just be sure you know the costs, however, since it can be several thousands of dollars; and you have to go through a counseling session.
I failed to include ...you can sell your home anytime - and of course, the money you have received, plus interest, will have to be paid back then, just as an existing mortgage loan would have to be paid when your home sells. In this bad real estate market, it's a way for an elder to get some cash from their home equity until the house sells. JUST as when you re-finance a home, there are closing costs, title policies, legal fees (usually $20-300) for drawing up the papers. You are essentially refinancing your home here..(or the equity)..and although you can get the payment in a lump sum, most elect to get it in monthly payments).
Just remember the final words. AS LONG AS YOU LIVE IN YOUR HOME. once you move out, to Nursing home or whatever, that is it. I still say it is not a good thing to do unless you have nothing are not able to live and have the necessities of life without it.
..............and if one went into a nursing home, are you positively certain you would be forced to sell your house. I do not believe that is so. .... I've been in this business for a number of years, ... and although I'm not aware of that particular circumstance. I would ASK before I oposted that going into a nursing home or rehab center would force the sale. This is the last I am going to post on this subject. As I said, I've worked in this field, and I only know what I have been taught/read/implementedl. Jane, you must have different experts, with different opinions, than I.
I too am having an elder care lawyer review our trust and see how our ( mainly my sole and separate) assets can be protected. From what I read, it can include him gifting everything to me ( not sure how that all works) or two trusts ( not sure yet how that would work) and other methods including divorce which would just destroy DH and send him over the edge for sure. He would forever wonder what he did to make me leave even though I wouldn't leave..and the disease makes this even harder. The one big thing he insisted on doing was paying off the house in case anything ever happened to him...so I would have a place to be, and with our military SBP he has paid into since 1980 for me to have some income...plus our savings...I know he will NOT want this disturbed.
And a reverse mortgage for me would be a desperation move...I feel there is more to lose than gain with this.. However everyone has individual needs and circumstances so see a good elder care lawyer first and then if push comes to shove, see a really skilled real estate consultant.
As an aside, I am lucky..the elder care lawyer I hired is certified in trusts, eldercare law ( one of only 9 in our state so certified) and is a real estate broker..so I think my selection for representation is highly qualified. I also know this lawyer's rating on the Martindale -Hubbard scale and the rating is top flight...Still I worry a lot,
I have mentioned my sister's reverse mortgage before. She borrowed about half the value to pay off an addition to the house. She had a adjustable reverse mortgage and in less than 4 years it ate up her equity. There is a limit which is the value it was appraised for at the time she took it out. Now she received a letter from the bank saying they are rewriting her loan to a fixed rate. They are going to credit back all interest then recalculate at the fixed rate which will be much lower than the adjustable. Now, whether this actually turns out to be good for her or the bank remains to be seen. She is waiting for the new paperwork from the bank. In the end it won't change anything - it will still eat up her equity to the appraisal price.
For her, if she did not live in the house the bank would require her to sell it. She talked of living with her daughter in California and keeping the house. I told her to read her contract and find out if there is a minimum number of days she must live in the house to be considered still there. My thinking is she could do it 6/6 months. You have snowbirds that only live part of the year in their homes, so that may be a possibility.
If someone goes into a nursing home and it is only temporary, then I can not see there being a question. But, if they are going to be there permanently then the house would probably have to be sold. It would probably depend on the terms in the contract and how quickly the bank wants their money. If waiting would mean more in interest, they might be open to waiting until death.
Unless the rules have changed recently, if you go into a nursing home, bank can't sell the house or require payment of the loan, for 12 months. After the 12 month period, the loan would be due.
from what i know the loan isnt called for repay until the last borrowing survivor dies, sells the house or no longer uses it as Primary residence. and you can go to a nursing or medical facility for up to 12 consecutive months before the loan would be due.
my brother is real estate as well owns his own agency with 20 employees. and we spoke of pro/con of reverse mortgages a while back.
and if one went into a nursing home, are you positively certain you would be forced to sell your house. I do not believe that is so. .... I've been in this business for a number of years, ... and although I'm not aware of that particular circumstance. I would ASK before I oposted that going into a nursing home or rehab center would force the sale. This is the last I am going to post on this subject. As I said, I've worked in this field, and I only know what I have been taught/read/implementedl. Jane, you must have different experts, with different opinions, than I.
Oh My goodness Nancy B, I am so sorry, I am not an expert, never have claimed to be, I am not talking with experts. YOU are the expert as you have already noted. Everyone knows I have never said or claimed to be an expert in anything that I post. Please forgive me Nancy B.
I was only trying to point out the cons as far as Medicaid goes with reverse mortgages, one size does not fit all and I know that. Just wanted folks to know that when it comes to Medicaid reverse mortgage is a bad idea.
One problem you can encounter if you have to enter a facility under Medicaid is that in order to qualify your assets can only be a certain amount, for an individual in the home only $2,000. With a reverse mortgage it is not counted as income to you until you draw out more than your part, but the assets that you accumulate while drawing your monthly amount or for that matter the cash build up you get with a lump sum pay out can quickly put you over the asset limit unless you spend it quickly and you cannot spend it for things that you can liquidate and get cash for. They have it covered , even after you have first qualified and cause you to loose benefits and even have to pay back benefits.
I did not say you were forced to sell your home that was something that was read into my post. What I did say is that once you move out of your house and go to a Nursing Home that is it, and it is, the trouble starts then. Please forgive me, Nancy B, I did not mean to mislead. I know you posted that I should ASK before posting to sell your home, I DID NOT POST TO SELL YOUR HOME. and I will not post any information again. YOU TAKE OVER NANCY B.
Jane, please do not take offense. As with ever move one has to explore it thoroughly and make an informed decision. I think there are many different experiences with reverse mortgages, but the most important is that if you want equity in you home for later use - move a complex like Joan is in, apartment, etc. - reverse mortgage may not be the best thing since it will eat your equity up. I do like the idea, if willing to pay all the added expenses, of borrowing against you home with a reverse mortgage until it sells. Then again, read the fine print. My sister had no idea it would eat her equity up so quickly. When I said something to her kids, their remarks were: we don't need the money. Maybe they don't, but she sure can if health forces her to sell or lack of funds.
I wrote a comment a couple of hours ago, but apparently didn't post it. It seems to me, after reading some of the posts, that there may be some confusion among reverse mortgages, home equity lines of credit, and refinanced mortgages. I wonder if that could explain the different opinions about what will happen if you move out of the home. I think the ultimate answer is to know what you are signing, be sure you understand the fine print, and make sure it fits your own situation.
My sister's was a reverse mortgage. She put an addition on her house which her son promised he would live there and make the loan payment, but he bailed on her. She had no other choice but the reverse mortgage cause she couldn't afford the loan payment. She does have a clause that if she doesn't live in the house for a certain amount of time, then she must sell it and pay the bank off. It is the length of time I do not know, she thought it was 12 months.