Paying for care
Reverse mortgage
A reverse mortgage is a loan that lets homeowners borrow against home equity without making monthly mortgage payments. The most common type is the Home Equity Conversion Mortgage (HECM), which is available to homeowners age 62 and older. The loan generally comes due when the last borrower sells, moves out, or dies.
Why it matters for your family
A reverse mortgage can turn home equity into cash to pay for care at home. The CFPB warns that interest and fees add to the balance, so the debt grows over time. Borrowers must keep paying property taxes and home insurance and maintain the house, or the lender can foreclose. The home must be the main residence. A HECM requires counseling from a HUD-approved agency. A common mistake is to take one without telling heirs. The family may need to sell the home to repay the loan. Talk with a counselor and a financial professional before signing.
Source: consumerfinance.gov
Related terms
- Home equity loanA home equity loan is a lump-sum loan secured by your home.
- Private payPrivate pay means a family pays for care directly from its own money.
- Aging in placeAging in place means staying in your own home as you get older.
- Medicaid eligibilityMedicaid eligibility for long-term care depends on need, income, and assets.
- Cost of home careThe cost of home care is the amount a family pays for in-home help.
- Elder law attorneyAn elder law attorney is a lawyer who focuses on legal issues of older adults.
