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, homeowners
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 primary Government regulations empower you to make
purpose of a HECM is to help seniors stay in their homes. informed decisions and protect you from default.
Loan requirements include maintaining the home and Borrowers are required to go through third-party
keeping current on property taxes and homeowners counseling by an FHA-approved counselor as part of the
insurance. application process. This acts as a safeguard by ensuring
you have thorough, unbiased information and that all
your questions are answered before you proceed with
No monthly loan payments are required.* your loan. Other protections include limitations on
Whereas most mortgage loans require some form of lender origination fees and a financial assessment to
monthly repayment, a HECM requires no repayment evaluate your ability to fulfill loan obligations.
until you move out of or sell the home, pass away, or
default on loan terms. This is beneficial because the
amount that would have been spent on housing can Upon repayment, the lender cannot collect more
be diverted toward other expenses, saved, or invested. than the home is worth.
However, if you so choose, you can make payments with Because HECMs are non-recourse loans, borrowers will
no pre-payment penalty. Your responsibility is to pay never have to pay more than the home is worth when a
for property taxes, homeowners insurance, and home
loan maturity event occurs.
maintenance costs, leaving extra money in your pocket
each month.
*Borrower(s) must continue to pay property taxes
and homeowner’s insurance, maintain the home, and
otherwise comply with the loan terms.