paying for caregiving
So what happens when the last borrower on the reverse loan passes away?
The terms of the loan state the borrower must occupy the property to avoid foreclosure, but if they have died, the loan is now technically considered to be in foreclosure.
However, as long as the Estate notifies Loan Servicing about the situation, they will be given ample time to repay the loan balance.
The Lender does not want to property, in spite of the myth in the general public’s opinion.
Assuming the borrower has family and they are considered to be the “estate”, they have two choices to repay the loan and the Lender will give them up to a year to satisfy repaying it.
List and sell the home. And that is what most family members do. They don’t want the home. They receive any remaining equity, plus a mortgage interest tax deduction for the interest that accrued on the loan ( There are no mortgage payments).
One or all of the family members apply for a traditional mortgage,( have the Title put into their names) and keep the property. They would still receive a mortgage interest tax deduction in the year they repay the loan back to the Lender.
I do have an excellent booklet for family members that was published by the National Reverse Mortgage Lenders Association that explains the process when it is time to satisfy the loan.
If anyone reading this post wishes for a copy of it, please contact me and I will send it to you.
Reverse loans have improved thousands of lives of seniors everywhere. They help with cash flow, paying for caregiving expenses, and eliminate living in fear of running out of money and they have brought comfort and peace of mind for seniors and their families.
They are not defined at predatory lending. They are well regulated and the protection of the senior is of utmost importance in our industry, and countless seniors and their families are relieved of the financial burden and worry about how to age in place.
Many families of seniors are facing a serious problem of not only aging parents who need assistance at home with their health problems but how to pay for this invaluable service.
Too often the care of older parents falls on the shoulders of one family member, who is typically a middle-aged married woman, has children at home and quite often has a career or is employed. Once a family member attempts to care of their parents on their own and without any help from other members of the family, they often develop their own serious health issues and sometimes die within a year due to the stress they are experiencing.
A family can quickly fall into bickering and fighting about how to handle the situation and in addition to this problem, there are the expenses of actually hiring a professional to provide the necessary assistance to the senior who needs help when the family member can no longer manage it on their own.
The fees for such services can vary, but on the average and depending upon if the care is needed 24/7 can be as high as $10,000 a month. How and who will pay for this? The family?
Probably not, but what if funds from a reverse loan were used to pay this expense? Why not utilize the equity in a parent’s home to cover this expense and any additional expenses for their care that may occur as time passes?
Using the equity in a parent’s home makes good sense for everyone in the family. The parents will be well taken care of and their family will not have to be overwhelmed with this responsibility, not use their own funds, miss family time or take time off from their professions each time an emergency comes up with their parents.
In conclusion, it is an excellent option to pay for the fees of caregiving and it is also a solution to keep families from using their own funds to pay for a caregiver, but also to protect their own health and the unity of their family.