We have tried to get a home equity line of credit for my mother and father but their income is just the $40 a month each stipend for spending money. They are only ones on the deed. Mortgage is paid for, no current liens. Can they get a personal loan or a home equity loan or a line of credit with co-signers? We are trying to keep the property up but necessary repairs have gone undone for a long time and the equity value is decreasing as the property falls into disrepair, and if this continues, when Medicaid forces the sale of the house, they will likely recover substantially less than if it is maintained or even improved while other family members reside there.
based on posts on this site, it’s about the 6 month mark where they realize math doesn’t work for keeping property & family don’t do whatever they promised that they would. So either gets sold or it gets rented out as fair market value rate or left to fall to tax sale. Renting is sticky in that rent is income so that can take them over the income limit is its already on the higher side plus there’s tax issues for rental income and whatever their city requires plus dealing with renters. But renting can be a way to deal with this as part of rental income can pay taxes, insurance, repairs with whatever left as monthly income to your parents. So is renting maybe an option. If so, look to property management co as they can bill for their service but you as an individual cannot. There have been folks on AC who have done this.
Also whether or not family or heirs can be reimbursed for property costs or have those cost deducted from elders Medicaid tally will depend on your states administrative code / laws. I’d bet it’s too late now to draw up a memo of understanding to be reimbursed as already on Medicaid. Some states allow for reasonable costs paid to be filed as after death exemption or exclusion to estate recovery on empty property. If your state does this, it’s on you to keep meticulous records & file in a timely manner; & perhaps open probate to get those costs as a claim against their estate. Once they die, costs become Executor costs and filed as that. But you have to have the $ to open probate & be able to pay property costs for however long probate is open. Judges -in my experience - fully expect Executor to pay insurance, taxes and whatever else needed to secure property. The house is an asset that has value and Executor is paid from the eventual sale if need be.
If you are feeling unable to afford costs now, really you might want to just fold & place it on market ASAP. If elders get viewed as having moved, property taxes will rise. Taxes will increase when they die too. If FMV is way way off from reality that is your parents place, I’d suggest you spend the $ to have it appraised. Often for elders, their place has decades of delayed maintenance but surrounded by homes that are renovated, so figure used by assessor are way off. Getting an appraisal helps rectify that. The difference could be quite significant & well worth paying $500 or so for a licensed, registered appraiser.
imo becoming a co-signer on HELOC does not make sense. It’s too much risk as you cannot walk away from loan as it’s securitized borrowing you sign off responsibility on & on property you do not own or truly control. I bet banks won’t do a heloc on in-a-NH owner. If things go totally tits up on the house, you can walk away from it as you are not an owner, it’s your parents place. They are in a NH so what their credit score or debts are doesn’t matter. But if you sign HELOC, your responsible.
yea it sounds pretty harsh but it’s a unforgiving math problem. Either you can honor your elders wishes if you can afford property costs for an totally Undetermined period of time on a Property you do not own & are ok on running that risk. Or you use your DPOA to sell it & then go thru a legit spend down so your folks can once again be Medicaid eligible. Really keeping it can be done if it makes sense for your unique situation but most families seem to sell the elders home within first year.
If you sell ur parents house, it has to sell at Market Value. Any repairs will need to come out of your pocket and Medicaid does not guarantee you will be able to recoup your costs upon the sale. I was told to keep meticulous records and even then, no guarantee. The proceeds will go to ur parents care. Medicaid will stop, u will need to spend down, then reapply to Medicaid.
I live in NJ. We have the highest property taxes in the country. I am retired. Right now my Moms house has tax leans and a Medicaid lean on it. Its 125 yrs old and needs more than a 100k spent on it to get it up to code. I don't have it. It will eventually go to sheriffs sale. When? could be 2 years (by law) or more. Depends when the tax holder wants to file.
Medicaid is not in the reality business so they will never take it.
what most people would do in this situation is to just sell the property and use the proceeds for their care.
If you pay the taxes and upkeep on that house, you will likely lose that money as the house will be sold to pay back Medicaid in death....you would get nothing back.
if the persons residing there provided her in home care for at least 2 years before she qualified for Medicaid...then the house will not be sold by Medicaid until they either move or die. Still...the eventual sale will not benefit the residents, just keeping a place to live.
honestly, I think you will not find any mortgage company willing to write a mortgage....Medicaid will always be first in line it get pay off from a sale....even a foreclosure sale, How will they ever get enough monthly income to make the Payments? Same problem exists if the current resident tries to get a second mortgage or equity loan...the equity belongs to Medicaid...also their name is not in the title.
i would say...if the cost of up keep is less than renting somewhere, then keep it up. Otherwise sell.
PS...I think the provision to allow the caregiver of 2 years to stay there only applies if they are relatives of hers.