For an older American who is looking to find a workable way to finance some sort of health care, whether it is for lingering problems or a disruptive health event, a fixed income seriously puts many seniors at a disadvantage in terms of their income. sufficient financial stability to comfortably cover costly expenses. Health care costs. This is where a person’s home equity can potentially come into play, up to and including a reverse mortgage.
This was a perspective shared in a recent ElderLawAnswers blog post, which sought to provide opportunities for a senior who has decided to view home equity as a way to cover some health care expenses.
The reader, who details that they have an estimated home value of around $ 1 million, also reports that the children in the family neither want nor need an inheritance.
âI would like to receive the best possible care if I become unfit. I know the value of my home will provide the care, âsays the reader. âWhat’s a smart way to allow my kids to tap into equity to pay for my care? Once I’m gone, they can inherit what’s left.
To access equity while staying in the house, the team that answered the question determined that there are really only two financial products that would make sense in the scenario described.
âTo access home equity during your lifetime, you can borrow against the home through a traditional equity line or reverse mortgage,â the response states. âAn equity loan is cheaper, but depending on your income, you may or may not qualify. Additionally, there can be significant limits on the amount you can borrow. “
While recognizing that a reverse mortgage may incur upfront costs that a traditional equity line does not have, the amount of usable equity is likely a concern when considering the use of the proceeds of the loan. loan: a generally expensive product in the form of health care expenses.
âA reverse mortgage can be more expensive, but will likely allow you to access more of the equity in the home, so it may be a good option in your situation,â the response states. “If your children or others have the resources to lend you money, another option would be a private loan secured by a mortgage on the house.”
Read the article on ElderLawAnswers.