Using a Reverse Mortgage To Pay For In-Home Care

As the cost of long-term care continues to rise, many people are turning to in-home care as a less expensive alternative to moving into a retirement community.

A recent study from Genworth Financial found the median monthly cost of an assisted living facility is $3,300 and has increased 6% since 2011. In contrast, the national median hourly rate for personal care providers is $18 with licensed home health aide services averaging $19 per hour and remaining the same year-over-year.

If you’re looking for a way to pay for care in the home, a reverse mortgage might be a good tool to help you age in place.

How Can Reverse Mortgages Help?

More than 75% of people ages 45 and over say they would like to remain in their homes for as long as possible, according to a recent AARP study. Reverse mortgages can help make that happen, even if homeowners do need additional care.

Borrowers who obtain a Home Equity Conversion Mortgage (HECM) have several different payment options they can use to fund care at home. Borrowers can choose to receive all loan proceeds as a lump sum upfront, as a line of credit, term, tenure, or a combination of the payment types.

What Types of Services are Available?

Home care providers typically offer help with bathing, getting dressed, cleaning, cooking and laundry, as well as nursing services that are provided by a registered nurse, or by a home health aides.

Home care providers work with the client to determine the services that are needed, and can adjust them accordingly.

Borrowers can also use the funds to make improvements to their home and make it easier to age in place. This may be through the addition of wheelchair ramps, grab bars in the bathroom, or improved lighting around the home.

There is also a specific type of reverse mortgage, the Reverse Mortgage for Purchase, that allows a borrower to get a reverse mortgage and buy a new home all in a single transaction.

For people who may be looking to move into a new home that is more equipped for their retirement living needs, the HECM for purchase allows them to do so.

Things to consider

In using a reverse mortgage to pay for in-home care, it’s important to recognize how much care you need. If it is a small amount, such as a few hours or days per month, a reverse mortgage may be a good way of paying for it.

Some borrowers may ultimately need more thorough or around-the-clock attention. If the borrower is not likely to be able to remain at home because of escalating medical costs or a need for more immediate help or hospital visits, it may be more economical to sell the home and move into a community that can provide a higher level of care.

To find out more or to speak with a reverse mortgage professional, contact us.

Everyone’s situation is unique, so if you are considering a reverse mortgage to pay for in-home care please be sure to contact a reverse mortgage advisor at MLS Reverse Mortgage at 1-888-888-4834 who can help navigate you through the reverse mortgage process and help you decide which program may be right for, if any. Use our free reverse mortgage calculator for an instant estimate.

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