Inventory
info icon
Single family homes on the market. Updated weekly.Powered by Altos Research
722,032+456
30-yr Fixed Rate30-yr Fixed
info icon
30-Yr. Fixed Conforming. Updated hourly during market hours.
6.99%0.00
RetirementReverse

Reverse mortgages can help with long-term care, but knowledge is key

MarketWatch takes a question from a reader about providing older parents with liquidity, including looking into reverse mortgages

A reverse mortgage may be a viable financial instrument to help pay for older Americans’ long-term care priorities, but they — and their implications on entitlement eligibility — need to be fully considered.

This is according to a new column at MarketWatch, comparing reverse mortgage product features to other potential options and enlisting commentary from an eldercare attorney.

A reader concerned about their parents’ cash reserves in retirement wrote to the outlet asking about ways they may be able to cover the costs of long-term care, which they say will be needed by their parents soon.

“They’re not on Medicaid at the moment, but they have a house that has been in a trust for only three years, and their children are named as beneficiaries,” the reader said. “Will we need to sell the house, or can they get a reverse mortgage to pay for their long-term care? Will they need to go on Medicaid?”

While Medicaid may be one of the more viable options, a reverse mortgage is a tool worthy of consideration according to Brian Tully, founder and managing partner at Tully Law Group which specializes in eldercare law.

“You never want a family to run out of money,” Tully told MarketWatch. “You always want them to have some money left, whether it is a retirement account, proceeds from a reverse mortgage they’ve moved to children or a well spouse. You always want to have access to money. Spending everything down is a mistake.”

The column describes selling the home to access equity as an option that “should be the very last resort,” since the home is a valuable asset they need not give up.

“Medicaid rules vary state by state, but in New York, for example, a primary home is exempt from total assets while the individual receiving care is living there, or intends to return there after their time in a nursing home,” the column said.

Limitations on other assets could come into play, however, and selling the home may end up disqualifying the parents from Medicaid. A reverse mortgage could present similar issues, the column said.

“You could get money from a reverse mortgage through a single lump sum, or regular fixed monthly payments, but that again can disqualify your parents from Medicaid eligibility — or require them to spend down those assets quicker than they otherwise would have,” it reads. “Look for a qualified and trustworthy estate or eldercare attorney who can help you make sense of your state’s specific rules.”

Leave a Reply

Your email address will not be published. Required fields are marked *

Most Popular Articles

Latest Articles

Lower mortgage rates attracting more homebuyers 

An often misguided premise I see on social media is that lower mortgage rates are doing nothing for housing demand. That’s ok — very few people are looking at the data without an agenda. However, the point of this tracker is to show you evidence that lower rates have already changed housing data. So, let’s […]

3d rendering of a row of luxury townhouses along a street

Log In

Forgot Password?

Don't have an account? Please