Reverse Mortgages & Long Term Care Insurance

beach What does this picture of the beach have to do with reverse mortgages and long term care? Nothing, but I have to get out of this heat and to a beach soon, just so you know…..

Ok, onward. I recently wrote an article for The Union, our general circulation newspaper here in Grass Valley, California exploring the topic of seniors’ potential long term care needs, long term care insurance, and reverse mortgages, written from the prospective of how my client expressed to me her thoughts on taking out a reverse mortgage credit line for her “maybe” future need of in home care vs. taking out a long term care insurance policy:

Recently a client reinforced the trend I’m seeing for clients’ to use a reverse mortgage credit line as not only a source of income as needed, a standby source of emergency funds, but also as an alternative to long term care insurance premiums.

It is estimated that approximately 70% of people turning 65 will need long-term care at some point in their lives. It is an uncertain expense, no life crystal ball. There are various methods to fund the cost: long term care insurance, Medicaid, self funding through savings, liquidation of personal assets, and/or a reverse mortgage credit line.

Genworth Financial, a long term care insurer, estimates approximately $45,750 annually for in home health aide, $80,300 annually for shared nursing home rooms, while assisted living costs vary dependent on the level of care.

Long term care insurance did not appeal to her: paying premiums for an insurance she was not sure she would ever need, coupled with the risk of rising premiums.

Medicaid would require her to liquidate nearly all her assets to qualify, wanting assets for heirs, she ruled out this option.

She owns her home outright, has retirement income and IRA assets, yet she decided to obtain a RM credit line loan as a standby in the event she needs in home care. The growth feature of the RM credit line was an added bonus: on amortization charts she was able to see how her reverse mortgage credit line borrowing ability grew over time. What was also appealing to her: she did not have to use her reverse mortgage credit line unless in home care was required, and if it was, then she controls the decisions and spending for care, thus eliminating having to negotiate with an insurer, and that she will only accrue an interest charge on funds actually borrowed.

Should she not need in home care, her untapped RM credit line will revert to inheritable equity for her heirs upon the home’s sale. As with all reverse mortgage loans she retains ownership and control of her home.

Shawna McDonald, Loan Officer, has successfully completed hundreds of reverse mortgages and is approved with 9 reverse mortgage lenders, ensuring clients receive low fees and great rates. Her office, Sierra Foothills Reverse Mortgage, is located at 412 E. Main Street Suite N Grass Valley, (530) 497-3010. Her website is www.SierraFoothillsReverse.com.

The opinions expressed here are solely those of Shawna McDonald, Loan Officer/Real Estate Broker Associate. Copyright © 2016. Shawna McDonald NMLS #271335 CA-BRE # 00585530 DBA Sierra Foothills Reverse Mortgage, Borba Investments Inc, DBA MLS Reverse Mortgage Auburn, CA NMLS #76801 BRE #01456165 ~ Company MLS #76801

 

 

Things to Consider About Aging In Place

Seniors in home remodeling

Retrofit my Existing Home or Move?

Reprint from Article Written for The Union Grass Valley Newspaper on April 28, 2015

A recent survey by Genworth Financial, a long term care insurer, noted that while overall long term care costs continue to rise, paying for care services in home is still the cheapest option*. Being close allies here in Grass Valley with local and may I say, beautiful assisted living communities, aging in place in one’s home is not for everyone, the thought of having meals prepared by gourmet chefs and lots of activities to choose from is enticing indeed. However, some of my clients complete a reverse mortgage credit line to tap into their home equity for funds to retrofit their homes for the next stage of life’s journey.

What is the typical cost of a retrofit? The MetLife Report on Aging in Place 2.0** recently reported the cost for design and structural modifications for a one story home will cost an average of $9,000 to $12,000.

What are smaller projects to consider? Replacement hardware, sturdy handrails, grab bars, single handled faucets, higher sitting toilets, rollout shelving in kitchens, and lighting in hard to see spots are all relatively easy and cost conservative.

If I funds are available, larger projects for electric scooter or wheelchair access; widening doorways, corridors, and ramps are bigger picture retrofits.

In home health costs are reportedly rising at a slower pace than facility-based care. According to the Genworth study, in-home health aide costs rose approximately 1.27% over a one year period compared to assisted living and semi-private nursing home care rising an average of 2.86% and 3.77% respectively.

Seniors in home with in home care provider

There’s no pre-determined correct path in this next stage in a senior’s life, it’s all about hopefully having the financial ability to exercise a conscious choice. In addition to a reverse mortgage credit line being used to retrofit a senior’s existing home, a reverse mortgage can fund assisted living/dementia care for one owner on title, as long the other owner on title to the home remains in the home as their principle residence. Also, an existing home can be sold to buy, via reverse mortgage for purchase, an already senior retrofit home.

One of my clients commented recently that they felt I conducted my business more like a consultant, not only a loan officer: someone who would listen to concerns and offer options, this after we spent time going over their future living and financial considerations; preparing for big picture changes for them as they entered their mid-70’s. Aging is not for the faint of heart, we all are moving forward in the journey of maturing and entering into new life stages. If you’d like to sort through some of your options with me, call for a personal appointment or attend one of my monthly Reverse Mortgage Workshops held in my local Grass Valley Office, lunch is catered and the last comment from several of the April workshop group: ” Shawna, that was fun!”

A closing thought: the recent HUD reverse mortgage program change requiring me to do a borrower financial assessment at the time of loan application is no reason to allow any lender to panic or pressure you, give me a call, I’ve got you covered for explaining this change!

Shawna McDonald has successfully completed hundreds of reverse mortgages and is approved with 8 reverse mortgage lenders. Her office, Sierra Foothills Reverse Mortgage, is located at 412 E. Main Street Suite N, Grass Valley, (530) 497-3010. Her website is www.SierraFoothillsReverse.com.

The opinions expressed here are solely those of Shawna McDonald, Loan Officer/Real Estate Broker. Copyright © 2015. All Rights Reserved, duplication and distribution prohibited. Shawna McDonald NMLS #271335 CA-BRE # 00585530 DBA Sierra Foothills Reverse Mortgage and Borba Investments Inc, DBA MLS Reverse Mortgage Auburn, CA NMLS #76801 BRE #01456165 ~ HUD approved lender. * 2015 Genworth Financial annual Cost of Care Survey     ** MetLife Report on Aging in Place 2.0, 2013