Be Educated About Your Options of Care and Financing The Care

Your Road Map for your journey of agingEducation and planning are the keys to making decisions especially when it involves care while aging.  You need to be proactive and know what resources and options are available.  With the education and a plan you have more options and can be proactive rather than reactive.

As Forest Gump said, “Life is like a box of chocolates, you never know what you’re gonna get.”  This is especially true for aging.  In mid November I was fortunate to participate in and be considered a trusted advisor at the Minnesota Private Duty Home Care Conference, “Keeping Mom and Dad at Home”.  During the conference attendees were encouraged to plan the future as they would a trip, looking at what would they put in their suitcase for the journey of aging and be prepared for what isn’t known to happen along the way.

Conference attendees reviewed what is known about seniors and their families.  We looked at what is known about seniors:

  • They underestimate their situations
  • They don’t want to worry or be a burden to their children
    • So seniors don’t tell their children what’s going on
  • They want their families help
    • Families often don’t have the time or the financial means to help
  • Role reversal is uncomfortable
  • They are fearful of nursing homes and moving
  • 93% say they want to stay in their home

Then we looked at what we know about the families of seniors:

  • They want to help
  • They are busy; they are the sandwich generation dealing with their own family, careers, life
  • They see changes but don’t know what they mean or what the warning signs are
  • They may become frustrated with their parents denials
  • Role reversal is uncomfortable
  • It’s generally women who are doing the caregiving; Minnesota is #1 in the country for working women.

Consider what’s important to the seniors, what do they want for their journey?  It’s important to involve the seniors in the process, the plan, and have them agree with the plan.  Discuss their wishes along with what you think is needed.  What will provide them their security, independence, dignity and control of their life?  Including a mediator and/or trusted advisor is a good idea.  If they are resistant to bringing someone else in, discussing their options, or accepting outside help, tell them that they may not need this but that you do.

By being educated and having your plan in place if a crisis occurs means more options will be available along with decreased costs.  Being reactive at a time of crisis means less options are available along with greater costs.  Emotional and reactive decisions make for poor choices and actions made from regret and guilt.

Part of the education and planning means getting the facts.  Unfortunately we have been conditioned to think that seniors will end up in a nursing home; that an assisted living facility provides all the care needed and is often the only option; that home care is short term and the nursing home and/or assisted living is safer than being at home.

Receiving Home CareWe need to recondition our thinking to:

  • Seniors can live at home indefinitely
  • Home care can provide a nursing level of care at home
  • Living at home can be safer; you receive a 1 to 1 ratio of care versus 1.5 or more of care per person
  • Living at home is affordable

Let’s compare the costs of home care options and assisted living rent and with home care options:

Home Care 1 $1,296/month 3-hour visits, 4 days a week, $27/hour
Home Care 2 $3,024/month 4-hour visits, 7 days a week, $27/hour
Home Care 3 $4,536/month 6-hour visits, 7 days a week, $27/hour
Home Care 4 $8,500/month 24-hour or live in care, one-on-one care, $275/day; includes a live in caregiver and frequent visits from a RN
Assisted Living Rent for 1 person $2,800/month 1-bedroom$3,200/month 2-bedroom Care packages range from $300 to $2,700 and would be above and beyond the rent; additional care would be charged per hour by a home care agency; there is an additional charge for a 2nd person in the apartment
Assisted Living Rent & Home Care 1 $4,096/month One bedroom apartment, 1 person plus additional care at 3-hour visits, 4 days a week, $27/hour from home care agency
Assisted Living Rent & Home Care 2 $5,824/month One bedroom apartment, 1 person plus additional care at 4-hour visits, 4 days a week, $27/hour from home care agency
Assisted Living Rent & Home Care 3 $7,336/month One bedroom apartment, 1 person plus additional care at 4-hour visits, 4 days a week, $27/hour from home care agency
Nursing Home $6,000 – $12,000/month Single or double room, level of care and facility amenities

Let’s look at selling and moving into an assisted living vs staying at home with a reverse mortgage:

Details: Home Value $200,000; 80 year old (reverse mortgage funds available will depend on age, older one is more funds available)

Selling Staying in home with a Reverse Mortgage
Third Party Closing Costs $2,211 $2,211
Less Real Estate Agent/RM Origination Fee & FHA Mortgage Insurance Premium $12,000 (6%) $8,000 (2% origination + 2% FHA MIP)
Net Proceeds $185,789 $110,108 in Line of Credit; $862/month tenure-for life; or term payments structured as needed (based on rates of 11/24/09)

Now let’s take the net proceeds and compare living in an Assisted Living to living at home with a reverse mortgage and receiving home care.

Selling and Living in an Assisted Living1 Living at Home using a Reverse Mortgage2
$185,789 ) $2,800 (rent only) = 5.5 yearsNo remaining equity from home. No rent or mortgage payment as long as you live in the home as your primary residence3Borrower is still responsible for household maintenance, i.e. taxes, insurance, utilities and stay in your home as long as primary residence (i.e. approximately $755/month for a $200,000 home)May have retained equity depending on how long you stay in the home and the home appreciation.  The loan is non-recourse.
$185,789 ) $4,096 (rent and Home Care 1) = 3.7 years No remaining equity from home. Roof over head; funds to cover home care 1 with term payments from RM = 9.8 years3 Additionally it is likely that there would still be retained equity in the home after the 9.8 years.
$185,789 ) $5,824 (rent and Home Care 2) = 2.6 years No remaining equity from home. Roof over head; funds to cover Home Care 2 with term payments from RM = 3.33 years3 Additionally it is likely that there would still be retained equity in the home after the 3.33 years.
$185,789 ) $7,336 (rent and Home Care 3) = 2.1 years No remaining equity from home. Roof over head; funds to cover Home Care 3 with term payments from RM = 2.1 years3
Additionally it is likely that there would still be retained equity in the home after the 2.1 years.
Then where will you go?Some assisted living will accept Medical Assistance or other public programs such as Elderly Waiver however your choices may be less. You can stay in your home and have a roof over your head without rent or mortgage payment even after funds from a reverse mortgage are used.Medical Assistance or other public programs such as Elderly Waiver or Alternative Care can be received even with a reverse mortgage.  Reverse mortgage does not impact receiving Medicare or Social Security.

1These rates do not take into consideration care packages or increases in rent charges so it’s likely that the number of years the net proceeds would cover will be less.

2With the reverse mortgage there is a growth rate factor that is passed along to the borrower.

3This time can be extended if you are receiving Medical Assistance or other public programs such as Elder Waiver, Alternative Care or qualify for Medicare covered Home Care.

Able to Stay in Home with Home CareYou have choices and can have control over where want to live and the care you receive. You have the right to say, I want to stay in my home (or keep my parents in their home).  When educated and with a plan for the journey,  you will have more choices and life will be easier.

Additional Suggested Reading:

© 2009 Beth Paterson, Beth’s Reverse Mortgage Blog, 651-762-9648

This material may be re-posted provided it is re-posted in its entirety without modifications and includes the contact information, copyright information and the following link:  http://wp.me/p4EUZQ-9A

Note:  This information and these home care and senior housing figures are  reflective of costs in Minnesota and are a compilation provided by the home care agencies at the 2009 Minnesota Private Duty Home Care Conference.  They are approximations and can vary by company, agency, facility and geographic area.

Blog posts’ information is current as of date post published, program is subject to change in in the future. Contact us for current information, 651-762-9648.

This site or the information provided is not from, or approved by, HUD, FHA, or any US Government or Agency.

Finance Retirement with A Reverse Mortgage

Retirement Financed with Reverse Mortgage

Retirement Financed with Reverse Mortgage

Estate planning, protecting one’s investments, traveling, and supplementing one’s income are desires of retirement   Large monthly payments, high interest rates, foreclosures, home repairs and modifications, and medical expenses can all be issues facing seniors.  A solution for those 62 and older to finance their retirement no matter what their circumstances may be a reverse mortgage.

A loan with no income or credit qualifications and no required monthly payments can provide tax-free cash for whatever one wants or needs.* (See below for updates implemented in 2015.)

Larry and Carol did a reverse mortgage so they could pay off their current mortgage and eliminate the payments.  Not having to make payments, Larry was able to retire, a much awaited and deserved event at the age of 70.  With $45,000 remaining in their line of credit, which grows so more money is available to them in the future, and a good estate plan, they can live comfortably without financial pressures.

Wayne and Barb were having financial problems because of high credit card debt and medical expenses.  Even though they don’t have remaining funds, with their reverse mortgage their cash flow has improved because they don’t have to make the monthly payments.  With a plan and a budget, they thanked us stating, “The reverse mortgage has helped us in our time of need to change our financial situation.  It has made a big difference in our lives.”

Working with an estate planner, a reverse mortgage helped Mary plan her retirement so she has funds for emergencies, medical expenses, traveling, leaving something for her heirs, and enjoying life without being dependent on her children.

A reverse mortgage is a loan similar to a conventional mortgage but with different terms to help seniors remain in their home with security, independence, dignity and control.  The borrowers keep the title to the home and are responsible for taxes, insurance, and maintaining the home.  Unlike a conventional loan the low-interest accrues, increasing the balance with no payments due until the home is no longer the primary residence of the borrowers.  In addition, the reverse mortgage is a non-recourse loan which means there is no personal liability to the borrowers or their heirs for repayment if they our their heirs are not retaining ownership.  Remaining equity goes to the borrowers or their heirs.

One can have a trust, life estate, or receive Medical Assistance, Elderly Waiver or other public benefits and use the reverse mortgage for estate planning.  Not considered income, Social Security and Medicare are not affected.

It may sound too good to be true, however, it is a safe way to access cash for retirement and remain in your home as long as you choose.

Enjoying Retirment with His Reverse Mortgage

Enjoying Retirement with His Reverse Mortgage

As Myrna stated, “It is really great not to have to be concerned about where the money will come from for my long term care insurance policy payment and emergency repairs.  It has relieved us of a great deal of stress and makes grocery shopping a lot easier too.”  Reverse mortgages have helped many finance their retirement, how can it help you?

*In April 2015 a Financial Assessment was implemented to determine borrower’s ability and willingness to pay property taxes and insurance into the future.  This safeguard help make the reverse mortgage more sustainable so borrowers can remain in their home.

For more uses of the reverse mortgage, read

© 2009 Beth Paterson, Beth’s Reverse Mortgage Blog, 651-762-9648

This material may be re-posted provided it is re-posted in its entirety without modifications and includes the contact information, copyright information and the following link:  http://wp.me/p4EUZQ-9e

Blog posts’ information is current as of date post published, program is subject to change in in the future. Contact us for current information, 651-762-9648.

This site or the information provided is not from, or approved by, HUD, FHA, or any US Government or Agency.

Reverse Mortgages Finance Home Care

Reverse Mortgage paid for grandma's home care

Reverse Mortgage pays for grandma’s home care

“Once we realized that we could only relieve the stress on us by contracting 24-hour [at home] nursing care for grandma, a reverse mortgage was the only way to do it.”  Liz wrote me.  Another borrower, Robert, did not want to go to a nursing home, yet he needed long term care.  George, Robert’s son, decided they should do a Reverse Mortgage to pay for the home health care needed to keep Robert at home where he had raised his children.  Robert is happy because he is living where he chooses.  George is happy the family can fulfill Robert’s wishes of staying in his home and still receive the needed care.

Last week I talked with a daughter who said that moving her dad to a nursing home would “kill him,” causing him to die faster than if he stayed in his home.  I constantly hear, “You’re going to drag me out of here (home) in a wooden box.”  “I want to go home, not to a nursing home,” is a common statement children hear from their parents after a hospital stay.”  But the challenge is how to make this happen.

Are you trying to figure out how to keep a loved one at home and have the financing to meet their needs?  Home care can provide the care and a reverse mortgage may be your financing solution.  The reverse mortgage can help seniors stay in their home and receive the care they need whether it’s long term or short term, a couple hours or 24 hours of care.  Just been released from the rehab center Margaret needed a home health care aide to assist her so she could remain in her home as she recuperated.  The reverse mortgage allowed her to hire the home care agency of her choice.

Did you know for seniors 62 and older, by converting the equity of their home into cash with a reverse mortgage…

  • They own home, no one else does.
  • They can stay in Their home as long as it’s their primary residence (in the case of a couple as long as one is still in the home).
  • They won’t lose their home because of a reverse mortgage if they abide by the terms of the loan – they don’t have to make monthly payments.
  • Tax-free money is government insured and guaranteed to be there for them (consult your tax advisor).
  • There is no personal liability to them or their heirs when the loan is repaid as long as they or their heirs are not retaining ownership.
  • They or their heirs get to keep any remaining equity after the loan is paid off.
  • There are no out of pocket costs, income or credit score qualifications for the loan.

Consider this…

  • They can access more funds if their mortgage is currently paid off or has a low balance.
  • Their cash flow improves when their current mortgage or lien payment is eliminated.
  • They’ll have extra cash for whatever they need or want!  For example:
    • Paying for care at home
    • Make home repairs or modifications
    • Cover medical expenses
    • Pay taxes or debts
    • Cover everyday living expenses
    • Strengthen personal and financial independence

Reverse Mortgage pays for Home CareHome care and a reverse mortgage can help fulfill a senior’s wish of staying in their home when some extra help is needed.  Consider the desires of the senior, what are their wishes?  What will make them comfortable and give them peace of mind?  Don’t deny a senior based on your opinion of reverse mortgages.  Don’t let reverse mortgage closing costs scare you, they compare to the costs of conventional loans but with a lot of additional benefits and protections.  If they want to stay in their home, don’t tell them to sell, realize there are solutions right under their roof.

Know the facts about reverse mortgages and work with a lender who has knowledge and expertise in reverse mortgages – it can make a difference for your satisfaction and making your life easier.  I’m proud to have received this statement from Liz whose grandma I assisted with a reverse mortgage:  “We make phone inquiries to 7 different reverse mortgage companies. Beth at Reverse Mortgages SIDAC had the best combination of resources, years in the field, step-by-step explanation of the process, investigating and appraising us of the options, comprehensive written materials sent promptly, advanced sills in communication with us and grandma, and high degree of emotional sensitivity. We were under pressure to have the funds to pay for grandma’s care, so their skillful management of the process proved to be critical. We appreciate Reverse Mortgages SIDAC and would recommend them without reservation.”

© 2009 Beth Paterson, Beth’s Reverse Mortgage Blog, 651-762-9648

This material may be re-posted provided it is re-posted in its entirety without modifications and includes the contact information, copyright information and the following link:  http://wp.me/p4EUZQ-8T

Additional suggested reading:  Be Educated About Your Options of Care and Financing The Care

Blog posts’ information is current as of date post published, program is subject to change in in the future. Contact us for current information, 651-762-9648.

This site or the information provided is not from, or approved by, HUD, FHA, or any US Government or Agency.