They received some $ from FEMA they have some savings. Should we just use their savings, or take the low interest SBA loan to get them a new home? We are trying to keep them on their property as long as possible. He has dementia, she uses a walker.
JKrystal - I’m going to approach this from a whole other viewpoint as one who went through Katrina. Regarding SBA, it is not as simple as touted. Your parents will need to qualify for the SBA loan; it is not automatic. They could be older & so outside the actuarial table for a 20 yr or 30 yr mortgage. Huge swaths of Lakeview & Gentilly were elderly property owners & could not qualify for SBA. Property went blighted and eventually sold and buldozed.
If the same system for Katrina is used, then SBA process for disaster recovery loans run on a different track than regular SBA programs. You will need to get detailed estimates on all aspects of the rebuild. The amount of the loan from SBA is dependent on what you can clearly document as a rebuild cost. A lot of folks went modular (rather than stick build) as it’s a pretty tight turnkey estimate on house costs, plus foundation, stairs, decks, garage, transportation fees. For Katrina, the SBA disaster max was like 225k, so if your costs were more than that (most were) your insurance payments gets used or you borrow extra $ from a SBA participant bank or you dip into assets or you do without. It’s going to be a real challenge and someone’s full time job to deal with for a while as there’s updating to SBA. Plus whatever required documents like a elevation certificate, FIRM mapping, survey, local permits, workmans comp policies from your contractor & thier subs, etc. Free estimates were few. PostKatrina an Elevation certificate that was maybe $350 prestorm was now 2k. Everybody needed it, so either you pay or you wait. SBA can & will close the file if it becomes inactive.
I’d be concerned that your folks have already gotten viewed as pigeons for scam contractors. So you are going to have to do serous follow up on whether licensing, Workman comp, etc are valid & review the estimate and terms in scrupulous detail. For Katrina, SBA had a form that had to be submitted by applicant that the contractor filled out with state registration and workman’s comp info & had to be notarized. “Contractors” flat disappeared. The scam artists know disasters are great for thier game.
If your folks are looking like they are going to be in a Velocity zone or any of the “A” zones for NFIP, realize new insurance costs will be quite quite different. SBA is going to require flood, windstorm in addition to traditional homeowners. PreK our combined insurance costs for the 3 was under 1k; postK first year windstorm alone was $5k. What sadly has happened is some who rebuilt post Katrina and now a decade plus later are retired do not have the income to pay insurance costs. Plus older in general so dealing with closing up a house if you have an evacuation is hard to do. Can your folks secure / move / take whatever on thier own if they have to evacuate next storm season?? Is their income such they can pay increased insurance costs and SBA payment in addition to regular living & health costs? SBA will foreclose.
SBA also requires that they are placed as a lien holder on your insurance policies. So if say there’s a hail storm and your HO pays 25k for roof work, SBA can hold the 25k unless you show roofer contract for 25k otherwise it gets applied to the loan. SBA $ is super cheap $ - 1.75% home/2.78 biz - but it’s very document driven & not simple. It’s also restrictive as can place lien status on any other property you own. On hindsight we would not do it.
An alternative could possibly be that your folks remain in “homeless” status and get fast tracked into whatever program the state is going to have to come up with for evacuees.
Difficult question especially if either or both need nursing home care on Medicaid If one remains in the community (community spouse) that person can keep their house as long as they live or until they also need Medicaid. They can also keep a sum of money. Don't know the amount but I believe Medicaid is controlled by the individual States so it could vary. They can also keep one car and household and personal belongings. It sounds as though they would have the best protection if they owned their home and use their savings. Will there be family who could help out financially for day to day expenses such as taxes if their savings are used up. Would it be better to rent a low income apartment. Lots of things to be considered so think it out carefully. The one thing you need to avoid is having more money in savings than the Medicare allowed by medicare. medicare can take that but they can't get at the equity in the home while one parent is still living there.
Who will be responsible for the repayment of the loan? How long do you think they will be able to manage on their own? Now might be the time to consider Assisted Living facility where they will both be safe and if you select the right one as the dementia progresses they will be able to remain there. This might be the time to consult an Elder Care attorney to discuss options. Assisted Living... Loan and rebuilding...and who would then be responsible to repay loan. Leaving the property with no residence, this may change the tax structure as well. Do they possibly qualify for Medicaid? Is either of them a Veteran? If so would they qualify for help from the VA?
Jk, there is nothing mean about getting an unsafe driver off the road - the lives of innocent people must be considered before another person's convenience or preferences. If he is no longer safe (and dementia does not get better) then please stop the driving. Remember that old man at the street market in Santa Monica who killed all those innocent people. He should not have been on the road at all.
They own their own property in the country and have some savings. Not sure if it would be better to save their $ and use the 1.75% interest rate loan or use their savings in case they have to go to assisted living.
The money they spend for a home will not disqualify them from Medicaid. The money they gave away in the 5-year lookback period (before the date they apply for Medicaid) may be a problem in that regard. If you think they'll need the cash available to pay for assisted living or just for their daily living expenses for long enough to get any large gifts they've made past the 5-year look back period, then you may want to consider the low-interest loan. As an example: If they have $100,000 and gave away a large sum a year ago, now spend all they have on a new home, they would have a penalty period before becoming eligible for Medicaid even though they have no $. Same circumstance, if they borrow to buy the home, they'd have the $100,000 to live on for 4 years, which could eliminate the Medicaid penalty. An elder law attorney would be helpful to you in making these decisions. In fact, ours was able to qualify my father-in-law for Medicaid by transferring their savings (which were over the limit) into a short-term trust that paid out to his wife alone. Don't know if your state allows that, but it's sure worth a visit to an Elder Law specialist to find out.
Jkrystal5, PRAYERS TO YOU ALL! The Lord works on mysterious ways! maybe this is a sign that your parents should not be on their own any more.Expecially if your dad has Dementia,wow that's hard for your MOM who has mobility issues ,there comes a time in all of our lives that we have to face these issues of our parents needing care ...Good Luck!
FEMA is providing them a handicap accessible trailer that they have tremendously upgraded for safety from previous storms. They now have a built in sprinkler system with a water holding tank that gives them 15 minutes to get out. Hopefully it will be comfortable for them and they can get settled into a semi normal house situation.
JKrystal - As per the AP.... “Louisiana residents displaced by August 2016 flooding and participanting in temporary housing program living in mobile homes have had the program extended. However rental requirements starting March, 2018. Waivers for rent will no longer be issued. Rental rates will range from $789 - 1 bedroom unit to $1155 - 3 bedroom unit.”
If this is a guide to what FEMAs approach is now for temp housing programs, your folks need to remember to save for rent in addition to rebuilding costs. The largesse that was seen for Katrina will not ever happen again, like 3 - 5 years of housing & SNAP support not likely.
For perspective on August flood was east of Baton Rouge: Put like 6’ of standing water in the I12 area by Denham Springs/Walker. Lots of property consider totaled / over 51% damaged. The spanking new TJMaxx had like 4’ of standing water for days. An astonishing eerie sight.
Vidor had 52" of rain plus they had to open dams which made things even worse. They had almost 4' of water in their home. We couldn't get to their home for a week which by then was full of black mold. It was horrible!! We have since demolished their home and are currently waiting on a FEMA house. We have them in a travel trailer at this time but they are at least on their property. Surprisingly they still had sheep goats chickens and cats that survived. It has been a challenge for over 3 months now. Dementia is definitely making this harder!!!
If the same system for Katrina is used, then SBA process for disaster recovery loans run on a different track than regular SBA programs. You will need to get detailed estimates on all aspects of the rebuild. The amount of the loan from SBA is dependent on what you can clearly document as a rebuild cost. A lot of folks went modular (rather than stick build) as it’s a pretty tight turnkey estimate on house costs, plus foundation, stairs, decks, garage, transportation fees. For Katrina, the SBA disaster max was like 225k, so if your costs were more than that (most were) your insurance payments gets used or you borrow extra $ from a SBA participant bank or you dip into assets or you do without. It’s going to be a real challenge and someone’s full time job to deal with for a while as there’s updating to SBA. Plus whatever required documents like a elevation certificate, FIRM mapping, survey, local permits, workmans comp policies from your contractor & thier subs, etc. Free estimates were few. PostKatrina an Elevation certificate that was maybe $350 prestorm was now 2k. Everybody needed it, so either you pay or you wait. SBA can & will close the file if it becomes inactive.
I’d be concerned that your folks have already gotten viewed as pigeons for scam contractors. So you are going to have to do serous follow up on whether licensing, Workman comp, etc are valid & review the estimate and terms in scrupulous detail. For Katrina, SBA had a form that had to be submitted by applicant that the contractor filled out with state registration and workman’s comp info & had to be notarized. “Contractors” flat disappeared. The scam artists know disasters are great for thier game.
If your folks are looking like they are going to be in a Velocity zone or any of the “A” zones for NFIP, realize new insurance costs will be quite quite different. SBA is going to require flood, windstorm in addition to traditional homeowners. PreK our combined insurance costs for the 3 was under 1k; postK first year windstorm alone was $5k. What sadly has happened is some who rebuilt post Katrina and now a decade plus later are retired do not have the income to pay insurance costs. Plus older in general so dealing with closing up a house if you have an evacuation is hard to do. Can your folks secure / move / take whatever on thier own if they have to evacuate next storm season?? Is their income such they can pay increased insurance costs and SBA payment in addition to regular living & health costs? SBA will foreclose.
SBA also requires that they are placed as a lien holder on your insurance policies. So if say there’s a hail storm and your HO pays 25k for roof work, SBA can hold the 25k unless you show roofer contract for 25k otherwise it gets applied to the loan. SBA $ is super cheap $ - 1.75% home/2.78 biz - but it’s very document driven & not simple. It’s also restrictive as can place lien status on any other property you own. On hindsight we would not do it.
An alternative could possibly be that your folks remain in “homeless” status and get fast tracked into whatever program the state is going to have to come up with for evacuees.
If one remains in the community (community spouse) that person can keep their house as long as they live or until they also need Medicaid. They can also keep a sum of money. Don't know the amount but I believe Medicaid is controlled by the individual States so it could vary. They can also keep one car and household and personal belongings.
It sounds as though they would have the best protection if they owned their home and use their savings.
Will there be family who could help out financially for day to day expenses such as taxes if their savings are used up.
Would it be better to rent a low income apartment. Lots of things to be considered so think it out carefully. The one thing you need to avoid is having more money in savings than the Medicare allowed by medicare. medicare can take that but they can't get at the equity in the home while one parent is still living there.
How long do you think they will be able to manage on their own?
Now might be the time to consider Assisted Living facility where they will both be safe and if you select the right one as the dementia progresses they will be able to remain there.
This might be the time to consult an Elder Care attorney to discuss options.
Assisted Living...
Loan and rebuilding...and who would then be responsible to repay loan.
Leaving the property with no residence, this may change the tax structure as well.
Do they possibly qualify for Medicaid?
Is either of them a Veteran? If so would they qualify for help from the VA?
If you think they'll need the cash available to pay for assisted living or just for their daily living expenses for long enough to get any large gifts they've made past the 5-year look back period, then you may want to consider the low-interest loan.
As an example: If they have $100,000 and gave away a large sum a year ago, now spend all they have on a new home, they would have a penalty period before becoming eligible for Medicaid even though they have no $.
Same circumstance, if they borrow to buy the home, they'd have the $100,000 to live on for 4 years, which could eliminate the Medicaid penalty.
An elder law attorney would be helpful to you in making these decisions. In fact, ours was able to qualify my father-in-law for Medicaid by transferring their savings (which were over the limit) into a short-term trust that paid out to his wife alone. Don't know if your state allows that, but it's sure worth a visit to an Elder Law specialist to find out.
If this is a guide to what FEMAs approach is now for temp housing programs, your folks need to remember to save for rent in addition to rebuilding costs. The largesse that was seen for Katrina will not ever happen again, like 3 - 5 years of housing & SNAP support not likely.
For perspective on August flood was east of Baton Rouge: Put like 6’ of standing water in the I12 area by Denham Springs/Walker. Lots of property consider totaled / over 51% damaged. The spanking new TJMaxx had like 4’ of standing water for days. An astonishing eerie sight.
See All Answers