Reverse mortgages are a great way for seniors to pay for care they need later in life, but there are some things they should consider before taking out the loan.
In order to qualify for the Federal Housing Administration’s reverse mortgage loan program, borrowers must be at least 62 years old and must occupy the home as their primary residence.
If something happens that leads a borrower to need care in a hospital for a long period of time, it could have an impact on the reverse mortgage.
Am I able to get care in a hospital with my reverse mortgage?
Borrowers are able to spend time in a hospital with a reverse mortgage, as long as the stay lasts no longer than a year.
According to the U.S. Department of Housing and Urban Development, if you spend more than 12 months away from your home for any reason, your reverse mortgage loan becomes due in full. This rule also applies to borrowers who move into other types of senior living care settings, such as assisted living, skilled nursing, and independent living communities as well.
The good news is that proceeds can be used to pay for in-home nursing care, which can cost seniors up to $200 per day for a semi-private room, according to a Genworth Financial report released earlier this year.
Rehab at home after your nursing home stay
Many seniors use home health aides to help in rehabilitation after a brief hospital stay. A reverse mortgage can help pay for these services as well.
Home health aides typically help those who are elderly to continue living in their own homes during their rehabilitation instead of residential care facilities or nursing homes. Home health aides may offer services to people who need more extensive personal care than family or friends are able, or have the time or resources, to provide.
The Genworth Financial study found the median hourly wage for home health aides was $19 in 2012. Reverse mortgages offer borrowers the option to receive monthly or tenure payments from their line of credit, which can be a great way to pay for a home health aide.