Individuals who live in their home, and have no
or a very low mortgage balance, may find that a
reverse mortgage will supplement income when
needed. While the borrower must be 62
years of age or older, caregivers who retain
durable power of attorney can investigate this
type of loan to help their loved ones.
for the funds are up to the borrower. Payments can
be received lump sum or through a variety of other
methods such as equal monthly payments; any extras can
be retained in an interest bearing account. Money
market mutual funds, which are considered the “least
volatile,” will allow checks to be written when
necessary. Taxes on the home can be pulled
from this type of saving from a reverse mortgage.
Because it bears interest, there may even be a little
left over to keep the account afloat for the following
year, or for other expenses.
financial advisor or a CPA should be consulted if the
amount selected is in excess of what is immediately
needed. Consult with one before signing a reverse
mortgage note, and know where the mortgage company will
be sending the funds. AARP cautions individuals
who are approached by “lenders” who offer to “invest”
Caregivers needing to make improvements on a loved one’s
home for safety reasons can utilize the funds from a
reverse mortgage to cover the bill. The current
appraised value of the home and any limits on lending
for the geographic area determine the amount available
are costs involved with reverse mortgages, but you
cannot owe more than your home’s value. Going
through a HUD approved counseling agency will help in
finding if the costs and process will be a positive
move. They can be reached toll free at
common misconception is that a reverse mortgage will pay
you money for your home and then “take it away” when the
borrower dies. Many folks worry that their home’s
current value will be given to them, and when it
appreciates, the lender will take that money, too.
This is not correct.
there are charges and interest involved with reverse
mortgages, and they can consume the additional funds
should the home be sold. The area the home is in
may undergo only a modest appreciation by the time it is
sold, and simply meet the amount to be paid back.
So while you will not owe more than your home is worth,
any loan requires interest to be paid. AARP has a
reverse mortgage education program and can be reached at
Evaluating your needs as well as your loved one’s is
important when considering a reverse mortgage option.
Many caregivers must take time from work or alter their
work availability to care for loved ones. Rather
than pull money from your own income, consider utilizing
this alternative source of income. If you have to
make up the difference so that medications or other
costs can be met, this will alleviate financial
drainage. It’s important to remember that should
you stop covering for these expenses that you budget
appropriately when you regain your income.
Upgrading the home is one way of “making” money with the
reverse mortgage. Changing floor schematics to
allow for walkers or other ambulation products will help
in the present and be a selling value for the future.
The safer the home is, the better the resale value.
Hurricane shutters will allow individuals to ride out
storms in their homes, unless they are in a mandatory
evacuation area. The shutters will still protect
the home whether it is inhabited or not, and can be used
if extended visits are made to keep the home secure.
family who cannot stretch their income to pay for home
health aides may find that a monthly disbursement will
cover these costs. Again, speak to your tax
advisor about how this affects your loved one’s taxes
and if anything can be written off at tax time.
reverse mortgage must be paid back once the home is no
longer the principal residence of one or more of the
borrowers. At the point where it is no longer the
main residence, the loan may be paid back out of pocket,
or from the proceeds of the home’s sale. Anything above
the loan amount belongs to the homeowner or their heirs.
why discussing all aspects of the option with family and
a financial representative is important. If you
are the primary caregiver and other family members are
in conflict with this idea, remind them of the costs to
take care of a loved one. If you are bearing the
major responsibility of caregiving and are the legal
representative, you are the one in charge of making the
decisions. Reluctant family may be reassured by
some instruction. Depending on the wishes of your loved
one, the will can reflect the appropriate distribution
of any finances left over from the reverse mortgage
Caregivers must remember to entertain all options when
considering a reverse mortgage, including how the loan
will be repaid. Programs that educate caregivers are
designed to explore the pros and cons of reverse
mortgages, and offer alternative options. The reputable
mortgage company will also outlay the facts rather than
“sell” you on the loan. Their information should match
up with what you learned from education programs like
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