Reverse mortgage for 80 year old aunt?

[Zero]

Other threads I found were overly "old" to reply to, sorry. My cornucopia runneth over with money matters this week. I lost the locking lid to it Sunday.

My DW's 80 year old aunt is still very spry but she seems to be within $100 dollars of choosing which brand of cat food to dine on. She has no children to help with bills, we have tried to make sure she has the necessities but she doesn't always willingly ask, and we are not near enough to check often.

She has $900 SS per month and some very small pension that I'd guess was less than $200. She has a paid-off home worth $150,000 and likely less than $500 in the bank.

Is a reverse mortgage really as bad as I think it is? And especially in this situation? She has no heirs. I could see this woman living to 100.

 

[REWahoo]

I don't know enough about reverse mortgages to offer any advice, but here are what appear to be good sources of information:

AARP: reverse mortgages

reverse.org

hud.gov

 

[Backpacker]

The amount she'll get vs. the value will not be very good. If she's ready I'd encourage her to sell and move to assisted living. She'd get more $ out of the house and some of the assisted living centers are amazingly nice.

 

[pb4uski]

It might not be bad but how long will she be able to remain in her home?

Would she be better to sell and rent a smaller place or senior subsidized housing? If she cleared $140k she could invest it and get another $700 or so a month, plus she would gain by not paying property taxes, maintenance, etc. on her current home.

Or if you have the financial wherewithal and willingness, perhaps you could "buy" her house from her, make her a small downpayment which would become her emergency fund and give her a lifetime right to live there rent free and pay her a couple hundred a month so she can eat real food. When she passes you would own the home free and clear. Might be a win-win if structured properly.

 

[rescueme]

I won't comment on the idea of a reverse mortgage (regardless of age), but this government site has a calculator that you can use to get an idea of the income or LOC available:

HUD FHA Reverse Mortgage for Seniors (HECM)

Note that most of the other available calculators require personal contact info, so I would advise against them (unless you want a lot of phone calls )...

 

[meierlde]

Actually given her age she might get more than one would expect, as the odds indicate that she will have few years left in her home. Also consider that in her situation should nursing home care be required the house will have to be sold before medicaid kicks in. One of the factors in a reverse mortgage is how long till the company will get paid, and for an 80 year old that is shorter than for a 65 year old.

 

[Zero]

Rescueme, I just looked at the Tax website for the county she lived in and found a $150,000 home near her and fudged in a name and it worked. Hope that house doesn't start getting offers from banks.

Suprisingly the calculator said 5.31% and an available lump of $103,000. So I put $100,000 into an annuity calculator and it said $879/mon.
That would probably solve most of her issues.

REWahoo, I'm reading the websites and it seems like lots of hidden issues like fees, and costs, etc. Yikes, why is nothing transparent?

 

[Zero]

Actually given her age she might get more than one would expect, as the odds indicate that she will have few years left in her home. Also consider that in her situation should nursing home care be required the house will have to be sold before medicaid kicks in. One of the factors in a reverse mortgage is how long till the company will get paid, and for an 80 year old that is shorter than for a 65 year old.

That was my thinking also. I'm going to run the calculator a few times with 62, 68,75, etc to see how age impacts the payout. EDIT: Just did the runs, a 62 year old would only get a $87,000 lump, a 70 yo a $94,500 lump and she at 81 gets $103,000, so yeah, about 20% more.

Wonder is credit rating is a factor because I suspect her's is really low?

PB4uski, good points on the housing cost savings. Hmm this more complex than I thought. She'd be able to save on property tax, insurance, upkeep and likely have lower utilies if she went to a care facility.

 

[LOL!]

A Costco membership may be cheaper than a reverse mortgage. She could eat there every day for free and it would not be cat food.

 

[Zero]

A Costco membership may be cheaper than a reverse mortgage. She could eat there every day for free and it would not be cat food.

I think the nearest Costco is 89 miles per Google.

 

[LOL!]

Then sell the house and move near Costco.

 

[Zero]

Then sell the house and move near Costco.

She got the same advice from her septic tank guy.

 

[REWahoo]

She got the same advice from her septic tank guy.

Guess he really knows his sh*t...

 

[FANOFJESUS]

If she would sell the home here is a way to get about $1300 a month plus the $1100 she already has. http://www.immediateannuities.com/ I am guessing that she would not have any income taxes either with this level of income. http://turbotax.intuit.com/tax-tools/calculators/taxcaster/?height=720&width=980&s=1 Many times only about half of annuity income is taxed. Of course you will have to work out all the details.
This is an idea if she has no heirs.

 

[Zero]

As you may well see, this is early morning. The DW and I had a late night (long-distance) chat and the conclusion was we will "offer gingerly" to pay for auntie to discuss some income producing schemes with a CFP who charges an hourly fee. Ideas for discussion will include the reverse mortgage and also selling of the house. DW will be present if possible.

LOL, I've given auntie some tips from your suggestive post:
1. Ask if cheap living quarters are available near Costco in Boulder?
2. Are 80 year old droids allowed to sample their samples?
3. Does Costco ever give out nutritious cat food samples?

Other options BTW (By The Wife) were, "hey, keep your checkbook handy.."

 

[LOL!]

I visited my mom recently. She is in her 80s. She really did take me to Costco where she gnoshed while driving around in an electric wheelchair/shopping cart. The pharmacy is also great.

She also really did sell her house in the past year and moved into an assisted living apartment. She could not really take care of the house anymore. And she really does have an annuity.

She had to give up her dog and does not have a cat.

I think there are some age limits for purchasing a SPIA, so do not let auntie get too old before she buys one.

 

[rothlev]

She may or may not qualify for HUD senior housing which only costs 30% of income, not sure if the house proceeds would count against her. Lots of seniors live and are very comfortable in these apartments which include some social activities and usually buses and access to the community. Also, check if she qualifies for food stamps.

 

[ziggy29]

Also consider that in her situation should nursing home care be required the house will have to be sold before medicaid kicks in.

I'm pretty sure that's not the case in some states. My understanding is that in some states, as long as the owner is alive they won't have to sell their primary homesteaded residence, but that when they pass away the home could be ordered sold, and Medicaid would be reimbursed from the proceeds.

One would definitely needs to understand their state's Medicaid laws here.

 

[Zero]

Medicaid seems like something that requires a lawyer to insure you get proper rights. I really am starting to feel the pain of those who may be passed their "fighting" age.

 

[pb4uski]

True, but it is because too many have tried to game the system and transferred their remaining assets to heirs rather than paid their own way until their assets are exhausted.

 

[mh]

She may or may not qualify for HUD senior housing which only costs 30% of income, not sure if the house proceeds would count against her. Lots of seniors live and are very comfortable in these apartments which include some social activities and usually buses and access to the community. Also, check if she qualifies for food stamps.

My grandmother lived in HUD senior housing for a while and she was very happy there. If she doesn't need assistance it's definitely worth looking into.

 

[obgyn65]

This would be my advice also.

Would she be better to sell and rent a smaller place or senior subsidized housing? If she cleared $140k she could invest it and get another $700 or so a month, plus she would gain by not paying property taxes, maintenance, etc. on her current home.

 

[Zero]

It's an interesting math problem.

She get's $100,000 to spend as she pleases and also "free" rent for life.

So the cost to her is the initial "fees" and the interest. Which is about $5,000 initial and $5,310 yearly interest. Over 15 years, let's guess, it would be like paying $500 per month rent ( and fixed, at that).

Hmmmm, not bad. Maybe it beats selling.

 

[FANOFJESUS]

Looks good zero going my way it would be I am guessing $540 for a HUD senior apartment. Going your way it is $500 and she can stay in her own home. She can also use the money for her LTC if she has to. But you should look at all options before you decide.

 

[FreeAtLast]

My mother stayed in her house until she was 90 when she went to assisted living and the house was sold. She was in a 55+ community so it had a few services and a club house not usually found in a typical neighborhood. She was there probably about 5-7 years too long. Things went wrong with her health, the house and her car during the last 5 years in the house.

I would look at all other options before you commit to a reverse mortgage.