Sunday, June 06, 2010

Aging in place: consider reverse mortgages, home equity loans: know the differences: and then afterwards what does it take to be cared for at home?

Today, Sunday June 6, AOL Real Estate provided an article by Megan Mollman, Housing Watch Contributor, “Home Equity Loan: A Good Option for Cash Strapped Retirees,” link here.

The article comports with recent reports of greater interest in keeping seniors in their homes as they age, and gaining funding for some caregiving services at home. Many seniors, despite the housing crash, have considerable equity in their (often older) homes (at least 50% of American homes do have positive equity), and a home-equity loan could pay for maintenance, living costs, and sometimes some caregiving costs.

A site called “Mortgage 101” explains the differences between a home equity loan and a reverse mortgage (link here ). A home equity loan is still a “forward mortgage” with regular payments. A reverse mortgage is paid back by heirs with a balloon payment (rather like church). A home equity loan offers the usual mortgage interest tax deductions.

Reverse mortgages are restricted to seniors. Home equity loans don’t place restrictions on age.

Both kinds of devices usually require that the senior live in the home. (HelpFHA mentions owner occupation, link ; a typical reference for home equity is here). I’m not sure what happens if the senior moves into a facility and a relative sits on the house. In such a situation, if the real estate situation in an area is favorable to selling the house, it’s probably going to result in keeping more money for providing care.

HUD also has a paper that explains the difference between reverse mortgage and home equity loan, here

The National Council on Aging has a somewhat sobering perspective on the challenges of aging at home even if you have financial resources through reverse mortgage or home equity loan here.

To that end, CNN has a story (June 4, 2010) about Irene Zola, as one of its potential heroes, “Pairing Neighbors with the Elderly”, by Leslie Askew, link here. Here website is "Support our Seniors" or "S.O.S." with link here and an interesting quote (over to the right) from novelist Pearl S. Buck.

Update: June 8

Facebook proffered a link from the "Reverse Helpline" saying "Stimulus Plan Increases everse Mortgage Limits For Seniors", link here.

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