When it comes to helping an aging loved one with financial decisions, caregivers want to make sure they take the time to understand all aspects of the transaction. One option for seniors that is becoming increasingly popular is to use the equity from their home to increase their cash flow. Some seniors need to pay off old home equity loans; others have credit card debt that they would like to eliminate. Some elderly parents need additional cash flow to pay in-home caregivers, and some need the money to simply be able to afford to pay their daily living expenses. Regardless of the reason, a reverse mortgage (also known as a Home Equity Conversion Mortgage) is a big decision for that senior, their family members, and their caregivers.
Reverse mortgages have received a lot of press lately. NBC Nightly News, ABC, and CBS have all run stories. Of course there are pros and cons to reverse mortgages, but interestingly enough, two large organizations support and advocate them, especially for seniors who need long-term care.
A study released by The National Council on the Aging (NCOA) shows that reverse mortgages can be used by over 13 million Americans to pay for long-term care expenses at home, allowing many to remain independent and in their homes longer. The "Use Your Home to Stay at Home: Expanding the Use of Reverse Mortgages to Pay for Long Term Care" report, funded by the Centers for Medicare and Medicaid Services and the Robert Wood Johnson Foundation, also shows how reverse mortgages can alleviate financial pressure not only for individuals and families, but also for state Medicaid programs and the federal government.