Has anyone here dealt with a parent’s reverse mortgage when they eventually needed assisted living or long-term care?
I’m helping my elderly mother sort through hers now and trying to better understand the real-world options for selling the home, handing over the deed, or whether heirs ever end up owing more than the house value. I’ve been reading up a bit and came across this page that talks about what typically happens after the borrower leaves the home or passes away.
Curious to hear from people who’ve actually gone through this with family members. What ended up being the best path financially and practically?
There’s not a lot of standardization of these things. Assuming you’re a USAian, state regulations vary greatly. As do details of the contract Mom signed. Your answers lie there. Might be useful to contact a local elder law attorney,
Right. I always had the impression that reverse mortgages are a bit of a scam: high upfront costs loaded in, poor interest rates, hard-sell marketing tactics etc. Basically I suspect them as bottom-fishing: taking advantage of what is often a distress situation. I have never considered one for a moment.
Things may have improved somewhat, but I would advise doing a LOT of due diligence. Consult an independent advisor; look in to alternates such as home equity loans etc?
As always with these things, my knowledge comes from Canadian law, but your cited article confirms what I have always understood to be the primary operative rule here – no matter how badly the reverse mortgage lender screws the homeowner on compound interest, neither the homeowner(s) nor their heirs will ever be liable for more than the fair market value of the home. This appears to be a universal rule, but you’d be well advised to check the details in your specific jurisdiction.
More or less correct, but things have to be viewed in perspective. Of all the options available to those at the tail end of growing older, “aging in place” is often the most beneficent and least life-stressful. I can think of two recent examples of individuals who had brilliant financial plans, and then dropped dead.
For the individual, perhaps. But in the larger perspective of the family, maybe not so much. My wife’s mother stayed in her home, probably for 3 or 4 years longer than she should have. She really needed professional care for those years: but my wife was stuck as a 24/7 caregiver, which put her life on hold for those years and put a great deal of strain on our marriage. My wife’s sister was all very enthusiastic about this: but she was hundreds of miles away and did not have to be involved with the daily struggle of trying to get ‘mom’ to eat, bathe or use the bathroom (diaper changes etc).
Sorry, this is quite off-topic. But obliquely relevant to ageing…
You need to read the agreement very carefully. Some of the ones I’ve seen provide that if the owner leaves the house vacant for a particular period of time (say, to go into nursing care or rehab) the lender can take the house.
The language of the agreement (as tempered by any applicable state and federal laws) will govern her rights, so you need to read and understand every word of the agreement.
If I may continue the off-topic digression for one more post – which may or may not have some tangential relevance to reverse mortgages – when my elderly mother was hospitalized for an extended period with congestive heart failure, my older brother made arrangements for her to move to an assisted care facility, I strongly opposed this, and I had the impression that he had the hospital administration on his side and that I was viewed as an irrational pain in the ass for everyone concerned.
We had gotten along very well all my life but this was the first time we had a real battle. What I wanted was for my mother to come live with me and my son (I was divorced). I convinced her that this was the right thing to do, and since her decision was paramount, the issue was closed. My brother raged in anger, and hospital staff hated me.
The point I’m making is that in our situation it turned out to be the right thing to do. We fortunately live in a civilized nation that provided her with all necessary personal and medical home care services at no cost to us, I took her out grocery shopping at all her favourite places, and she loved the flowers and song birds that surrounded the house. My brother eventually conceded that this had been the right decision. But every situation is different, with different options and constraints.