To me, moms "care" situation should be the overriding factor as to determining IF even looking at HELOC, RMs could be worthwhile.
Moms situation will it get better? Like she tore her rotor cuff putting in herb garden and needs at home help for maybe 4 - 6 mos till she's cleared PT & othro followup and gotten back to doing & driving, then a line or credit heloc could be a good idea as she's apt to stay in her home for years..... But if mom has dementia, another chronic disease or two and every day has difficulty doing what needs to be done (like taking medications properly), staying in that home just puts off the inevitable of needing 24/7 oversight done & unless that home is worth over 500k, the lending amount will just be a band-aid on the bigger problem. And will lessen or zero out the equity mom could get from just selling house and using the sale $ to pay for care in a facility.
I have to add that I think reverse mortgages are very messy. They are very expensive and complicate matters if someone needs to go into a nursing home. I don't really consider them an option for most people, particularly people who are very old or have dementia.
There are only a few ways I can think to do it. Home equity loans or reverse mortgages are very expensive and do have to be paid back according to their schedules. Another option is to sell the home but keep a life estate for your mother to live there until she goes to a nursing home or passes. Is your mother determined to stay in her home? Does she require 24/7 care? Let us know a bit more and someone may have some ideas.
This is a dangerous game to play, as Jessie has mentioned above. Depending on how long your mother lives, the money from the equity in the home may eventually run out. Most nursing homes run at least $7,000 per month for a single person's care. (My mother's NH was $7,000-$8,000 per month for private pay.) And with money from the equity in the home, your mother would not qualify for Medicaid until the money was spent down to provide for her care - and THEN....if she is on Medicaid when she passes away, if the home equity loan is paid off, the Medicaid Estate Recovery Program will demand sale of the home to be repaid for the expenses they covered for her. It's kind of a lose-lose situation.
Momshelp - I'm not a fan of RMs but if your mom is just fixed & going to do one, then getting one that is a line or credit RM is the better evil. Pls pls please look to see if there will be increased insurance needed..... If mom has owned the house forever, it could be way way underinsured on homeowners or not carry insurance now required for mortgaged properties. Like where I live in New Orleans area, mortgaged property need flood insurance (private rates once over 250k nfip value) and probably need wind$torm insurance as well. Could easily add on thousands in insurance cost annually.
So you do have your own home, right? So neither you or other family caregivers do NOT need moms house to have a roof over their heads? This is critically important. There was a caregiver on this site whose mom had a RM & she lived with mom for decade plus had no real income. They lived basically on moms SS & retirement. Moms care got beyond her & then she fell ill as well; mom moved to NH & RM called in mortgage. She had like 90 days to establish funding in full or get evicted plus deal with moms NH adjustment & medicaid application. Beyond tragedy.
I will say this, if an aging parent wants to keep their homestead - whether it's they go onto Medicaid and keep it as an exempt asset or get a RM On it - they & their DPOA are best off only doing whatever is the minimum required to be in compliance for city codes, mortgage or other legal needed to protect the property (like pay taxes, have insurance). Like replace window pane but not whole window. Doing things to increase property value is not to your parents or their possible heirs benefit.
Hi I'm looking into the same thing. No expertise here just trying to learn & decide what's best for mom. Every situation is different obviously but my mom & I want her to remain in her home. It's safe & she has a pet. I am leaning to a reverse mortgage even though the cost to obtain it is high. I'm going with the line of credit & only pulling out caregivers salarys as needed. I'm hoping the money last 4 years at which time she will be almost 92. Hopefully with me supplementing her care so I only pay 3-4 days it will work. That's a lot of hopefully & wishful thinking, but it's what I believe will work best for us. I have spoken to 2 elder law attorneys & called medi-cal & I strongly urge you to do the same. If she is willing & can sell it to move to AL that maybe better for you. Making these decisions for my mother has been very difficult, wishing you luck & clarity.
Momshelp, when my Dad had around the clock caregivers from a professional Agency [3 shifts each day] it was a sticker shock at the cost. Dad was paying $20k per month, yes per month. And my Mom, who was in long-term-care, it was costing $12k per month.
Thank goodness my parents had "rainy day" savings to help tie them over this last journey. My parents were in their 90's so that was a blessing.
I was so glad when my Dad decided on his own that he wanted to move to senior care. The rent and one shift private caregiver, cut the cost in half. Pets are allowed at some Independent Living and Assisted Living [different from a nursing home in my area].... depends on the size of the dog and if the dog is quiet.
Her dog is a 80lb German shepherd😊there is one other reason this will be the best scenario. I know about sticker shock!I've run the figures through over & over different scenarios & 24 hr paid care won't be a reality. The brunt will be on me & in 4 years or sooner I will need to be ready for placement. I will pay neighbors & their college age children at first at a discount because she's still mobile & able to do her own hygenine. She's not much physical work yet. It's a difficult journey but if possible I'd like to give her these 4 years before her health physical & mental deteriorate. I know decision isn't the most cost effective but it's our preferred option.
Igloo thanks. Yes I have my own home,full time job & spouse & pets I'd like to spend some time with while still helping mom to stay home. Line of credit is what I'm going to do no matter what. You are spot on regarding insurance & im waiting to see how high that goes. Luckily she wasn't drastically underinsured. I'm not doing a thing regarding improvements but I did have to invest money to comply with fha appraisal. I will pay myself back through the RM. The loan is definitely an evil but to just take on 24/7 365 while my other siblings wait for an inheritance is ridiculous. I will spend moms equity on her as long as I'm able to stretch it. Having the RM allows me to hire some help that the sibs are not willing/able to provide. Like I said it will still fall on me but I'm ok as long as I get some help.
Moms situation will it get better? Like she tore her rotor cuff putting in herb garden and needs at home help for maybe 4 - 6 mos till she's cleared PT & othro followup and gotten back to doing & driving, then a line or credit heloc could be a good idea as she's apt to stay in her home for years..... But if mom has dementia, another chronic disease or two and every day has difficulty doing what needs to be done (like taking medications properly), staying in that home just puts off the inevitable of needing 24/7 oversight done & unless that home is worth over 500k, the lending amount will just be a band-aid on the bigger problem. And will lessen or zero out the equity mom could get from just selling house and using the sale $ to pay for care in a facility.
So you do have your own home, right? So neither you or other family caregivers do NOT need moms house to have a roof over their heads? This is critically important. There was a caregiver on this site whose mom had a RM & she lived with mom for decade plus had no real income. They lived basically on moms SS & retirement. Moms care got beyond her & then she fell ill as well; mom moved to NH & RM called in mortgage. She had like 90 days to establish funding in full or get evicted plus deal with moms NH adjustment & medicaid application. Beyond tragedy.
I will say this, if an aging parent wants to keep their homestead - whether it's they go onto Medicaid and keep it as an exempt asset or get a RM On it - they & their DPOA are best off only doing whatever is the minimum required to be in compliance for city codes, mortgage or other legal needed to protect the property (like pay taxes, have insurance). Like replace window pane but not whole window. Doing things to increase property value is not to your parents or their possible heirs benefit.
Thank goodness my parents had "rainy day" savings to help tie them over this last journey. My parents were in their 90's so that was a blessing.
I was so glad when my Dad decided on his own that he wanted to move to senior care. The rent and one shift private caregiver, cut the cost in half. Pets are allowed at some Independent Living and Assisted Living [different from a nursing home in my area].... depends on the size of the dog and if the dog is quiet.