Page 2 - AAG120_Senior Care Trifold

Using Home Equity to Fund
In-Home Care
If you’re like many homeowners, your house is your
greatest asset. Like others, you may need access to
additional funds to supplement your health insurance
in order to cover expenses like in-home care. A Home
Equity Conversion Mortgage (HECM) loan, also known
as a reverse mortgage, allows you to put your hard-
earned home equity to work for you. HECM loan
proceeds are tax-free and can be used to cover the
cost of your care needs while you continue to live in
your home.
HECM Loan Basics:
3 You must be 62 or better
3 Your home must be your primary residence
3 You pay no monthly mortgage payments so long as
you continue to pay property taxes, homeowner’s
insurance, and home maintenance costs
The Facts:
Many incorrectly believe that
medical insurance will cover
in-home, long-term care 1
70% of those 65+ will need assistance
at some point 2
Aging in place has been shown to have
health and emotional benefits over
institutional care 3
25%
25% fewer doctor visits occur when
home care is in place 4
Loan Advantages
You can live in your home as long as you wish and Loan proceeds from a HECM are not taxable.
retain the title, as long as you comply with loan Because some of your sources of income, such as
terms. investments, may be taxed as you draw from the
As with all other mortgage loans, a lien is placed on accounts, you may find this tax-free loan helpful as a
the home. One common misconception about HECM source of money.
loans is that borrowers are selling their homes to
their lenders. This is simply not true; the borrower
continues to own the home and retain the title. The Government regulations empower you to make
primary purpose of a HECM is to help seniors stay in informed decisions and protect you from default.
their homes. Loan requirements include maintaining Borrowers are required to go through third-party
the home and keeping current on property taxes and counseling by an FHA-approved counselor as part of
homeowner’s insurance. the application process. This acts as a safeguard by
ensuring you have thorough, unbiased information
No monthly loan payments are required.* and that all your questions are answered before you
proceed with your loan. Other protections include
Whereas most mortgage loans require some form of limitations on lender origination fees and a financial
monthly repayment, a HECM requires no repayment assessment to evaluate your ability to fulfill loan
until you move out of or sell the home, pass away, or obligations.
default on loan terms. This is beneficial because the
amount that would have been spent on housing can
be diverted toward other expenses, saved, or invested. Upon repayment, the lender cannot collect more
However, if you so choose, you can make payments than the home is worth.
with no pre-payment penalty. Your responsibility is to Because HECMs are non-recourse loans, borrowers will
pay for property taxes, homeowner’s insurance, and
never have to pay more than the home is worth when
home maintenance costs, leaving extra money in your
pocket each month. a loan maturity event occurs.
*Borrower(s) must continue to pay property taxes
and homeowner’s insurance, maintain the home, and
otherwise comply with the loan terms.