Elders Skeptical of the Reverse Mortgage
One of the more traumatic events just occurred this last week for me. I got my AARP membership card in the mail! One of my dear friends apparently pulled together $12.50 for a one year membership.
Interestingly enough, the Website (www.aarp.org) has great material on what to look for when determining the options of a reverse mortgage. Another great informational site to check out is www.reversemortgage.org. Listen up adult children; you are going to have to investigate this subject because your parents probably will not, and the good news is you can do it online.
According to the National Council on the Aging, only 13% of older homeowners who were surveyed say they are likely, or very likely, to use a reverse mortgage citing the concern of losing their home or depleting their children’s inheritance! Strangely enough almost two-thirds of the adult children surveyed believe that a reverse mortgage can help older people continue to enjoy the comforts of home. It confirms for me that adult children are more interested in their parents maintaining a quality of life than they are about what mom and dad will leave behind. And by the way, you do NOT surrender the title to your home.
By analyzing homeownership data for year 2000 (what happened to the last five years?) collected for the Federal Health and Retirement Study, the group found that 13.2 million households in which the homeowner or the homeowner’s spouse was at least 62 years old could qualify for at least $20,000 in equity ($72,128 on average). That totals to $953 billion…and guess what? The older they are the more money they can receive!
In 9.8 million households that qualified for reverse mortgages, the study found either the homeowner or the homeowner’s spouse already had difficulty with or needed help with personal care or household activities (3.8 million), or suffered from a functional limitation (6 million) such as having trouble climbing stairs or carrying groceries. We know where they want to stay - in their home – and we all know where they decline, in the nursing home. And that brings us to the subject of long term care…
It is estimated that at least 40% of the elderly will have a nursing home stay. Surveys also reveal that 10 million people have become disabled enough to need nursing care in the home or at a nursing facility. Long term care in nursing homes will average around $150 per day. For people staying a year or more in a nursing home (the average stay is 2.6 years), the annual cost of care is greater than $50,000, and those costs are expected to increase over time at a rate greater than inflation. From a funding standpoint, 25% of formal long term care is funded out-of-pocket, and nearly one in four families in this country provide informal care in the home.
When you think about it, this generation passed on the importance of homeownership. Little did they know that all of their diligence in paying off that mortgage would one day be their final payback for being disciplined enough to pay off the home. Now is the time for adult children to take the lead in educating their parents on the benefit of reverse mortgages. It is true that you will not end up with as much to inherit, but you will be able to extend their stay in the one place they call home. Good job!
Please call toll free at 1-888-973-8377 with any questions regarding a reverse mortgage.
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Source: ReverseMortgageLead
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