Reverse mortgage for 80 year old aunt?

[tryan]

Dad looked at reverse mortgages after taking a hit around 2008 ... the FEES were cost prohibitive (12% !!). So he did a cash out refi instead. Lowered his rate and got some cash in hand.

That said, with no heirs and a cashflow problem .... that's really what the reverse mortgage is designed for . Moving at 80 is not everyones cup of tea, so if she's bent on staying in the house, go for it (reverse mortgage) ... the home equity might never be tapped for her use - otherwise.

 

[LOL!]

My mom moved out of her house before things got out of hand. She wanted to have the time to make new friends in her new (and final) location. She will have time to become completely familiar with her surroundings, appliances, neighbors, etc without any of the headaches of finding tradesmen to keep the place in shape and the added benefit of caring, concerned neighbors of her age and professional staff in her complex.

She had seen too many of her friends trapped in their homes of familiarity while things deteriorated on the inside, the outside, and the neighborhood.

I think she made a great decision.

 

[rothlev]

HUD is 30% of income. If income is $1100 a mo, HUD will be $330. Price you can't beat. I know of someone living on less than $700 mo. in HUD housing . She is comfortable, gets meals on wheels for free, and food stamps. However there may be limits on the assets, which could mean if aunt sells the home the money may disqualify her. When my MIL lived there the desk politely let us know when her checking account balance was too high so we would take some of the money out. There may be a way around this, you'd have to do some homework.

 

[Zero]

After doing some reading online, it appears that Reverse Mortgages have lost favor with all large banks and there are now specialized lenders doing it. It also appears Congress has put regulations on the fees. From what I can tell, the "truth" is only known once the paperwork is done. She just needs to know the right questions to ask.

I think my "help" in all this will be just getting together a list of questions for the lender to answer prior to signing. When/if the DW might want to take her aunt to a lender for a preliminary discussion.

EDIT: rothlev, thanks, that is great info to know.

 

[rothlev]

Also: if you look into HUD housing, look at ALL the options, some can be in "bad" areas, while others are totally wonderful. There is likely a waiting list, especially for the cream puff buildings, ( some are church affiliated)

 

[2B]

Asking about a reverse mortgage tells me she is in a financial "death sprial." The odds are that she will evenually need assisted living and probably nursing care in the future. Medicaid can only cover nursing care and few decent private nursing facilities accept Medicaid. Medicaid nursing homes are pretty bleak even by the bleak surroundings I've seen in private facilities.

I would recommend she move into an independent living facility and put any cash left after the sale of her house in something very safe like CDs. She needs to get her living costs below her current income. Someone she trusts needs to have her power of attorney and know where her assets are..

 

[Zero]

Wow, I'm coming to the conclusion (if she sells the house) that this is the beginning of a likely 3-stop process for her. First, independent senior care living, second, likely assisted living and third, nursing home.

I think I may have a chat with an elder care attorney. Got to make sure that having a nest egg does not impact her ability to get assistance.

Thanks for the comments, they raise lots of new issues/questions.

 

[2B]

A nest egg will keep her from getting assistance but she will be in a much better situation without it. Earlier in the process with my in-laws, an elder care attorney said that he could create a trust that would transfer the assets to DW and her sister without triggering discovery in the "look back" rule. He wanted $7K and he seemed a bit sleezy. The estate attorney we used said that it wasn't a good idea to try.

The path from independent through nursing is not necessarily a given but it is possible. Having assets gives better options during the process.

 

[Nords]

Wow, I'm coming to the conclusion (if she sells the house) that this is the beginning of a likely 3-stop process for her. First, independent senior care living, second, likely assisted living and third, nursing home.
I think I may have a chat with an elder care attorney. Got to make sure that having a nest egg does not impact her ability to get assistance.
Thanks for the comments, they raise lots of new issues/questions.

As 2B says, the key is for her to move into the care facility as a "private pay" patient. Then as her assets spend down she can apply for Medicaid. The care facility can't discharge her for inability to pay, although they can exploit other "opportunities" like extended hospital stays or behavioral issues.

When my father entered his care facility a year ago (private pay), I got three calls from the billing department making sure that I knew about filing for Medicaid. They called at least monthly for the next six months just to let me know that claim approval could take 6-12 months. When the LTC claim got approved and I explained that it'd pay out for about 3.5 years, they agreed to check back with me then.

 

[Zero]

Thanks to everyone for sharing "real-life" experiences.

2B and Nords, that info effectively ends my look at reverse mortgage.

In short summary of points made that influence that are:
1. Selling the house outright gives her more money to provide funds for the "private-entry" phase, whereas a smaller nest egg might get her excluded from the better facilities.
2. Selling the house also eliminates what I feel is an expensive up front cost of the reverse mortgage.
3. And my biggest concern is that the Rev. Mort. requires her to live in her home, so if 6-7 years go by and suddenly she is in need of care; what then. She might have spent a fair portion of the money and then be faced without funds sufficient to repay the loan. Forcing foreclosure and hassles just as she needs care, not legal worries.

I see no need to rush anything so we will likely supplement her income a bit and at least supply the higher end cat food. Guess I'll be back to drinking PBR or "white can" brand.

 

[REWahoo]

...we will likely supplement her income a bit and at least supply the higher end cat food.

One of my son-in-laws says I shouldn't worry about running out of money in retirement, he knows where to get Fancy Feast at wholesale prices....

 

[Zero]

Looks like your DD married a thoughtful man..
Has he got a brother that can get wholesale PBR, I got a daughter needing a good man..

 

[tryan]

And my biggest concern is that the Rev. Mort. requires her to live in her home, so if 6-7 years go by and suddenly she is in need of care; what then.

Then the house is sold ... the reverse mortgage is just a lein on the house. She'll get the unused equity. Just need to ensure there is no early termination fee.

 

[Zero]

Then the house is sold ... the reverse mortgage is just a lein on the house. She'll get the unused equity. Just need to ensure there is no early termination fee.

It's hard to picture this lady at 86 or 87 with the burden of foreclosure placed on her doorstep. I wonder who is gonna be there to work out the: "get the house cleaned up" for sales purposes, sign "zeees paper ole lady", where do you want these household good stored?, come on hussle up, etc.

 

[dmdunca44]

It's hard to picture this lady at 86 or 87 with the burden of foreclosure placed on her doorstep. I wonder who is gonna be there to work out the: "get the house cleaned up" for sales purposes, sign "zeees paper ole lady", where do you want these household good stored?, come on hussle up, etc.

Especially considering that if she does have to move it would most likely be due to health issues (and/or) dementia.

 

[powerplay]

One of my son-in-laws says I shouldn't worry about running out of money in retirement, he knows where to get Fancy Feast at wholesale prices....

Now that's a comforting thought.
Does this SIL have any 'special' meatloaf or casserole recipes he's been trying out on you?

 

[Zero]

Now that's a comforting thought.
Does this SIL have any 'special' meatloaf or casserole recipes he's been trying out on you?

Here is one I have become fond of:

1 can cat fuud
1 loaf cheap bread

Mash together thoroughly.

Eat

 

[Zero]

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.

This is exactly the situation that I was hoping to find. Seems like this is a regional thing and somewhat "hit or miss". After looking in my DW's aunt's area, the pickings seem slim.


I'm still looking. The wife is asking questions, I keep making excuses, ...

 

[dmdunca44]

zero,
Your first post indicated that your wife's aunt did not live near you. Is she (and are you and wife) open to the option of her moving closer to you? Would that widen the range of possibilities for senior housing?

 

[Zero]

zero,
Your first post indicated that your wife's aunt did not live near you. Is she (and are you and wife) open to the option of her moving closer to you? Would that widen the range of possibilities for senior housing?

Thanks for bringing up that question (and answer is "not sure, but doubt it", because she is well established, friends-wise,where she is living in her state and we are in CA but moving often). She is a distant relative but one whom the DW "loves".

 

[Sarah in SC]

Zero, I agree that the reverse mortgage is a bad idea (fees and so forth), but I'd like to say how really nice it is that you and your DW are helping her with this decision. Y'all are good folks!

 

[misty57]

Zero, I agree that the reverse mortgage is a bad idea (fees and so forth), but I'd like to say how really nice it is that you and your DW are helping her with this decision. Y'all are good folks!

There is another thread on this forum about the a reverse mortgage situation when Medicaid might be required for LTC in the future. Both of his parents and eventually his mom might might not be able to leave her own home due to the Medicaid 5-yr. look back. The laws to be changed to exclude the value of the home when a spouse is involved so the spouse is free to move to a more appropriate living situation if needed.

 

[Zero]

Zero, I agree that the reverse mortgage is a bad idea (fees and so forth), but I'd like to say how really nice it is that you and your DW are helping her with this decision. Y'all are good folks!

That reminds me of just how easy it is to be "good folks".
Especially when the DW tells me "Hey Bozo, for once in your pathetic lifetime....".
No she didn't But not saying she wouldn't.