Seniors: Selling the house to pay for care - your or your spouse's - is a big mistake

Today's Reverse Mortgages have Protections that make them smart options

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by Lisa LaMagna, Editor, AgeInPlaceFinance.com

Thriving at home for seniors who want to age in place

Budget $50,000 per year for care

Nobody planned for this, but hiring an in-home caregiver costs *at least* $23 per hour in California. If you are hiring someone for 8 hours a day, 5 days a week, this is a full-time job costing you $50,000 per year. And this doesn't even start to cover evening and overnight help, or weekend help.

Even 4 hours a day, Monday through Friday, costs about $24,000 per year.

Here is a table summarizing costs:

table showing 40 hours per week of home care costs fifty thousand dollars

Don't Make The Mistake of "Selling Out"

In this overheated real estate market, you may want to sell the house and "cash in." But now, you are losing any upside appreciation for yourself and your heirs. And you must move to another place.

I know plenty of seniors who have "downsized" to independent living only to move out 6 months later to a bigger place. Don't undervalue being in the home you love, in the community you know, and the benefit of "aging in place." Moving should be the last resort. If your spouse or you is requiring care to support your health, the safest thing may be to stay where you are comfortable. Home modifications, visiting home care aides and family members, days enjoyed at the nearby senior center, all these can allow you to age in place, and even thrive.

Want to Refinance? Not so fast!

If you are age 62 or better, you may not qualify to refinance your home with a "cash out refinance" -- also known as the traditional "home equity loan." This is because your total income, comprised of social security checks and pensions - is not enough to pay a new mortgage payment, plus all your monthly bills. A lender will look at your costs for utilities, property taxes, homeowners insurance, and living expenses, build in a buffer for inflation (which is rising) and compare these against the new mortgage payment. Few people 65+ qualify.

Did you know?

In a reverse mortgage, you always retain title and full ownership of your home. There is simply a new mortgage against it.

Today's Reverse Mortgage is a better answer?

Smart and financially astute Californians are tapping into their home equity without selling their house. This home equity can be used to pay for in-home care aides, renovations, day center visits, and all the things that help you or your loved one thrive.

With today's reverse mortgage, you keep your home. You keep title to your home. You participate in the appreciation of your home. And you get monthly payments -- or a lump sum -- to help pay for care.

What's different is that, instead of monthly mortgage payments, these payments -- principal borrowed plus interest -- are deferred for the future.

In the future, if you sell the house, you or your heirs pay back the mortgage.

The Difference Today

Many rules and practices were changed after the 2008 real estate crash to protect seniors and families.

Reverse mortgage professionals will speak with you and your heirs (if you choose) to discuss planning and review scenarios. Everyone is in the loop.

You retain title to your home all your life. You only have to keep the house maintained safely and pay the taxes and insurance.

You (or your heirs) can come out ahead, if your home's value appreciates more than the accrued interest.

You or your heirs are never "on the hook." You'll never have to repay more than the 95% of the home's value.

Your spouse is included in the reverse mortgage contract, and your spouse can live in the house all their life.

Right for you if...

A Reverse mortgage is an option to consider if you want to live the rest of your life in the home you love:

  • You always keep ownership of the house
  • You can borrow up to 50% to 75% of the equity in the house
  • You can receive lump sum or monthly payments
  • You can still leave the home to your heirs

Is this right for you?

  1. Use our decision tool, below
  2. Find out how much estimated financing is possible
  3. Get a personalized report and a US Government "scenario guide"
  4. If you like, have a low-key consultation with our vetted partners

Ready to learn about

Today's Reverse Mortgages?

This is not your grandfather's reverse mortgage! You keep title to the house, can pass it on to your heirs, and protect your spouse.