๐Ÿก Use a Reverse Mortgage to Pay for Long-Term Careโ“ Hoey Team ๐Ÿ€ 239RealEstateDeals.Com LLC โ˜˜ Southwest Florida ๐ŸŒด

Dated: June 21 2022

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A reverse mortgage allows older adults to tap into home equity yet still live in the home.  For unexpected health care expenses, it might be a good idea – or maybe not.

Florida Realtor Magazine 2022 06 20 Shouls i use a reverse mortgage to pay for long term care after Ukraine Russia conflict China COVID coronavirus plandemic and Biden Administration decisions Barry Hoey 239RealEstateDeals.Com LLC

NEW YORK – Someone turning 65 has nearly a 7-in-10 chance of needing long-term care in the future, according to the Department of Health and Human Services, and many don’t have the savings to manage the cost of assisted living.

But they may have a mortgage-free home – and the equity in it, giving them the potential option of a reverse mortgage to help cover care costs.

Here’s how to evaluate whether a reverse mortgage might be a good option.

What is a reverse mortgage?

A reverse mortgage is a loan or line of credit on the assessed value of your home. Most reverse mortgages are federally backed Home Equity Conversion Mortgages, or HECMs, which are loans up to a federal limit of $970,800. Homeowners must be 62 years old to apply.

If you have at least 50% to 55% equity in your home, you have a good chance of qualifying for a loan or line of credit for a portion of that equity. How much you can access depends on your age and the home’s appraised value. You must keep paying taxes and insurance on the home, and the loan is repaid when the borrower dies or moves out. If there are two borrowers, the line of credit remains until the second borrower dies or moves out.

A reverse mortgage is a non-recourse loan, meaning if the loan amount ends up being more than the home’s value, the borrower or inheritor won’t have to pay more than the loan amount owed or what the home could be sold for.

Can you use a reverse mortgage for long-term care?

A reverse mortgage can provide a crucial stream of income to pay for long-term care, but there are some limitations.

For instance, a reverse mortgage requires that you live in the home. If you’re the sole borrower of a reverse mortgage and you have to move to a care facility for a year or longer, you’ll be in violation of the loan requirements and must repay the loan.

Because of the costs, reverse mortgages are also best suited for a situation where you plan to stay in your home long-term. They don’t make sense if your home isn’t right for aging in place or if you plan to move in the next three to five years, says Marguerita Cheng, a certified financial planner in Potomac, Maryland.

But for home health care or paying for a second borrower who’s in a nursing home, home equity can help bridge the gap. If you want to pay as you go and not pull money out of securities in a down market, you can pull it out of your home equity, says Dennis Nolte, a CFP in Winter Park, Florida.

What are the advantages of a reverse mortgage

Your home is generally one of your biggest assets, and using its value to handle long-term care costs can make sense.

  • You’re tapping an “up” asset. “Most people will find that their home is the only asset they own appreciating this year, and that makes it a good source to utilize for income needs,” says Byrke Sestok, a CFP in Harrison, New York.
  • You can lock in value. If you think you’ll have trouble covering a future long-term care need, you can get a reverse mortgage now, when home values are high. An unused line of credit grows over time, so your balance will have increased by the time you need the money.
  • The income is tax-free. All money you withdraw from your reverse mortgage line is tax-free, and it doesn’t affect your Social Security or Medicare benefits.

What are the disadvantages of a reverse mortgage

Reverse mortgages can solve a problem, but there are downsides to using the equity in your home to cover costs.

  • They’re expensive. Getting a reverse mortgage costs about as much as getting a traditional mortgage – expect to pay about 3% to 5% of the home’s appraised value. However, you may be able to roll the costs into the loan.
  • You must pay interest. Interest accrues on any portion you’ve used, so eventually you will owe more than you’ve borrowed.
  • You’ll leave less to heirs. The more of your reverse mortgage you use, the less you’ll be leaving behind.

The question of whether to use your home equity as a stream of income can be complicated and depends on your other assets and plans for the future. A financial planner can help you run the numbers and point you toward a vetted reverse mortgage specialist if the product makes sense for you.

Barry is an SRES, Senior Real Estate Specialist, we have more resources for seniors on our webpage:  www.SRESAgent.Com  

๐Ÿ‘‰ The Hoey Team ๐Ÿ€ 239RealEstateDeals.Com LLC โ˜˜ serves all of Lee County and Collier County, including the Gulf Coast Islands here in Southwest Florida where we had 7 of 10 hot market projections for 2022.  We Directly Help Sellers and We Directly Help Buyers; sometimes representing both in the same transacton with everyones best interests in mind.

Recently as Listing Agents, Barry & Kim with the Hoey Team; 239RealEstateDeals.Com LLC โ˜˜ helped a number of sellers who had been in Foreberance and in similar situations.  We were able to get all of them to a "very good place"; worry free & stress free; with excellent end results for them.   Also, Kim is a certified stager which helps us additionally on all of our listings. 

We help / serve people in many different situations; everybody's situation is different even in a hot sellers market as we recently had. 

If you know someone needing help; or simply wants advice, please have them reach out to us in confidence: 239-360-5527; anytime; we continue to achieve excellent results in the communities where we list and sell utilizing our Experience, Systems and Tools.

Sadly for some time we see a number of sellers who are not keeping up with the changes locally; putting their homes on the market and selling them for than what the market is still able to bear at this time.  Additionlly; selling a home the first day on MLS may not guarantee the best price for the seller as many homeowners had been doing.  Please call Barry at 239-360-5527 for more information on this.

We offer a confidential / private, custom Concierge Service, if their property needs work ๐Ÿ€  For every property situation, we have a solution / solutions with a proven track record โ˜˜

As people continue to move and relocate to the general areas of Lee & Collier Counties from other parts of the United States, it is important that we are able to directly serve all of the area; which we do, efficently.  We have the ability to offer many different Choices and Lifestyles all of which are in abundance here in SW FLA, 239RealEstateDeals.Com LLC has blanket coverage of Southwest Florida and most of Florida for that matter by being active members of four different MLS systems.

Inventory remains steady, but low overall; we do continue to list and market new South Florida property listings to the marketplace and we sell many different type homes; Resale & New Construction; Multigenerational Family Compounds, Regular Single Family Homes, Villas, Townhomes and all Condo types, from low rise, to waterfront high rise right on the Beach / Gulf Coast. 

We continue to see many people planning ahead, and buying that second home now, rather than waitiang as they were planning to do; especially with Snowmads and Zoombirds working from home.  Previously we had Snowbirds; interesting how terminology keeps changing / evolving. 

Interest rates increases are sadly driving many buyers out of the market place, we do see price reductions on some overpriced / under marketed listings.  Even with the recent 0.75% interest rate hike, buyers are still looking, though not as many as before.

Low inventory is still a chalenge for active buyers who are not prepared; but if prepared you are ahead of the game; ask how we can help with all of that.  We do see more listings coming to the market here in Southwest florida, so, that is good.

We recently got a number amazing deals for buyers; even in this recent Hot Sellers Market; and we are working on others as our market shifts.  There are deals out there; if you work with us, we will definitely find them for you. 

For those relocating to Florida, we are pleased to be able to assist homeowners in other parts of the United States who need to sell to buy here; please reach out today for more information and how you can have a smooth, non-stressful transition / relocation.

At our Real Estate Team; Hoey Team โ˜˜ we have been succesfully working 100% virtually / remotely for the past number of years as we continue to grow; i'm thankful that we already had systems in place to better help sellers and buyer with goal posts continually moving within our industry / profession.

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Best Places to Retire? 13 of the ‘Top 25’ Are in Fla โ˜˜ Hoey Team; 239RealEstateDeals.Com LLC ๐ŸŒด Southwest Florida ๐ŸŒด

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