I'm looking for options to pay for memory care. How can we tap into Mom's home equity without adding more expenses?

You should really consult with an elder law/estate planning attorney and/or a Medicaid Planner because how income is generated to pay for her MC now may disqualify her for Medicaid if/when she requires LTC. Many people who think they've saved enough require Medicaid. This is an option you need to preserve for your mom and it is easily screwed up when people go forward with transactions that impact her ability to qualify. In many states the look-back period on the Medicaid app is 5 years. The house must be purchased for fair market value or else Medicaid will see it as gifting, a no-no. Your best strategy is to talk to a professional for her home state since laws differ in each one. For help paying for MC, contact social services for her county to see if she is eligible for an Elder Waiver.

Your mother would have to sign for an equity loan since she owns the house. Your mother is no longer considered competent with her condition to sign legal documents. Any financial decisions on behalf of your mother can only be accomplished with a DPOA or guardianship documentation. So any financial options on the house cannot be done without those legal documents.

There are new methods of creative financing. One, a company will offer to make you a cash purchaser of a home making you a safer, quicker and easier contract to close. Then when ready to close on your new home with the company that purchased in cash, on your behalf will charge you a "fee" for a short term loan, typically 2%. On a 600K home, that a $12,000.00 fee.

Don't think so!

The daughter that is living there, is she "just" living there or is she paying what would be a fair market rent? As a renter you still have to pay all your own utilities. Property taxes and costs of maintaining the house could be paid out of the money that is paid by your daughter for rent. (daughter renting also pays for insurance just as you would if you were renting anyplace else)
You would need to draw up a proper lease agreement.
Any excess money would go into the fund that would be used to care for mom.
Seeing an Elder Care Attorney would be a good idea.

I would set a time limit on the purchase by your other daughter. You could make the lease or rental agreement with your other daughter for 2 years., At the end of 2 years your other daughter has the option to buy. If she does it is sold at Fair Market Value. If she can not purchase it or does not want to then the house is sold, or your daughter can extend the lease. This would give you either a continuing stream of income to care for mom or it would have a single influx of cash from the sale to use toward her care.

Sus, is the real estate market in your area tanked?

We have no inventory in our area and houses are selling at a premium.

Have you had an agent come in and do a comp appraisal?

The only way I can think of to retain the house and not create additional expenses would be a reverse mortgage but, mom would need to stay in the home.

The problem with any type of lending against equity without monthly payments is the interest is accruing and compounding, making any type of this loan really expensive.

Is your credit good enough to co-sign for daughter with a side agreement that she refinance in 5 years?

Have you checked into what public assistant is available in your area to help you help mom? I have read here that NY has very different programs that help keep people out of facilities. Maybe she qualifies for assistance.

You're right to be looking, what you're doing isn't sustainable for you as her disease progresses.

What a tough spot to be in. Great big warm hug! You will find the solution.

Cela certified elder law attorney.

Daughter wants to buy house in a few years?

Daughter could very easily change her mind. Any number of things can happen in the next few years to change her mind. When it sells it must be at fair market value. Sell it so you have funds for memory care.

Your could rent the house, especially if it's paid off. That's the best and easiest way to get cash fairly reliably each month, but of course, there are expenses involved in owning a rental property, so you can't use up every cent on her care.

Realistically, the smart thing would be to sell the house, invest the money in a fairly safe investment, and pay for her care that way. That's what HER assets are for -- to care for HER. I don't know the story about the daughters, but the house is not for them until Mom is gone, and if she still has financial needs, then the house needs to go in order to pay for those needs.

That's how it works for anyone, but too many people seem to think they can't use the assets they've accumulated in their lives to pay for their own care. I get it -- you spend your whole life scrimping and saving, and it's hard to imagine not doing that and starting to spend that money and those assets. However, they are now your mom's income, and if the house is all that's left, then it needs to go.

A home equity loan does add to the costs because it has to be paid back monthly with interest! Unless one of your daughter's can buy mom's house now, releasing that cash for her to use to finance Memory Care, I don't see how you can get cash out of it for "free". Google Noah loans, which I know nothing about, but claim to be a home equity loan alternative with no monthly payments. Sounds fishy to me, so your best bet is to ask a lender rather than an internet forum.

Good luck!

You can't.

Your daughters sound completely enraptured by the financial end of the free house deal. Well the deal with that is that they're going to take on the whole burden of care including paying for aides if mom can't. Or the house gets either rented or sold so that mom has the assets to have private pay choices that often lead to better medicaid beds.

Your one daughter living there in the house and keeping the lights on can just leave if Mom's not there and if this granddaughter is not paying full market rent. At least a rental would keep mom in income for what SHE needs. Your other daughter can decide to purchase this house for the same price any other rando would have, meaning to maximize assets for mom. If they won't or realistically can't help anymore, this is what mom's assets are for. Her. Not you and not your daughters.

May want to speak with a CELA. Are you looking solely to use the equity or have plans to switch to Medicaid to cover the cost?