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There are very few situations where they make good financial sense. I do not know your situation, so I cannot comment on it.
One issue is that the reverse mortgage becomes due when you move out of your home. So to use the funds to pay for long term care, if you are thinking of residential care may put you on the wrong side of the rules.
The home owner is still 100% responsible for insurance, property taxes and maintenance.
The interest on the line of credit account will not be the same as the interest rate the reverse mortgage is compounding.
I would look long and hard at all other options before signing up for a RM.
A spouse may be permitted to stay in the home, depending on how the contract is written.
It has probably worked out for some but we don’t seem to hear from them. It seems to usually be done out of desperation without researching alternatives.
I admit I’m biased against it as a SIL lost her home after her husband died suddenly at 68. She was too young to sign the paperwork at the time RM was entered into. She signed a release of some sort acknowledging she knew about it but at that time, that was not enough to allow her to stay in the home past his death. They could have refinanced once she was 65 but the costs to do so were very expensive and so they didn’t. No one in the family knew they had entered into such an agreement. So she lost her husband and then her home.
Even as a partner and not a spouse, if you live there, you might be asked to sign off on it. Beware.
To make a long story short, she was able to purchase the house because it had gone up so much in value she had equity. W's SS helped her too. Remember, she was on the deed. She has found a job (at 66 years old). Her daughter and roommate moved in with her as renters, to help pay the mortgage. Don't know how long this will last, so far it is working out but it was very iffy there for a couple of weeks. If it wasn't for this pandemic with housing purchases at a low, and mortgage companies hungry, she could have been in a pickle.
Before he died, he was sorry he had taken out the RM. I looked into it at one time and the interest rates and fees were awful.
I would think several times about it. Personally, I think I am lucky I am not married to a house. Having moved a lot in my life, I know there is always another place on the horizon. I also worked in Fire and have seen too many people lose everything and have to start over to think a house is the end all.
PS: just looked at ur profile. If your the same age of your partner I don't think I would invest in LTC insurance.
Plus you have to read the fine print - some longterm care insurance has very stringent conditions to meet before it takes effect. I had a friend whose dad had Alzheimer's severe enough for him to require memory care, but because he could still manage to eat without assistance - not prepare food, just eat it - his expensive longterm care insurance didn't cover his expensive long-term care.
The line of credit that I am familiar with refers to allowing the borrower flexibility in taking out money. Borrowing money to invest safely makes no sense. A senior in need of LTC borrowing to invest with risk is worse.
The only reason I would ever use one is if I knew I had a terminal condition, my family didn't need the money, and I planned to live life as richly as I could. Then I would travel, exploit the funds available, and leave the house and the unpaid mortgage to any of the sleazebag companies I chose. In others words, exploit them as they have exploited others. Payback.
On a serious note, I'd find out a lot more about this so-called line of credit account and the interest it allegedly receives. Actually, the entire mortgage could be considered a line of credit, but it's unlike a HELOC. And I'd like to know more about how it receives interest.
Typically revere mortgages are reversely amortized; they increase in obligations after any withdrawal, and monthly. Interest grows like weeds in a garden. But that interest isn't available to you. I think someone's handling your partner a "line" and misrepresenting the true nature of the role of interest in maximizing the return to the reverse mortgage issuer.
Your partner should also consider whether compromising an asset such as a house could jeopardize qualification for Medicaid if it's needed.
Further it is counted as income so this can affect MEDICAID, and can make you ineligible or simply kick you off of it if you are on it.
Banks and government are crooked and I would only consider it if I were actively dying like in cancer -- and once the owner dies the bank owns the house leaving your heirs nothing.
I also would ***NOT*** entirely trust any articles AgingCare experts put out on the "benefits" of reverse mortgage--you do NOT know if the article has BIAS or not. Paid advertisers get all the benefits including biased articles. So get a good estate attorney and talk it over and yes you ****WILL**** need an estate attorney. Once you sign...you just signed your own enforceable warrant.
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