Using Reverse Mortgage Funds to Cover Medical Expenses
Even with the recent changes in healthcare reform, many Americans are faced with financial challenges when it comes to paying for medical costs. From unexpected surgeries to prescription drugs to mental health therapy and more, many Americans’ insurance and/or government benefits are unable to fully cover the associated costs. This can be especially challenging for senior citizens. A reverse mortgage may be a good solution for seniors who need to access cash to help cover medical expenses. Although reverse mortgages aren’t right for everyone, qualified borrowers age 62 or older, who have substantial equity in their homes, and don’t expect to move or go into nursing home care within the next few years, may find it to be a valuable financial solution.
How it Works
Reverse mortgages work in the opposite way as traditional mortgages. With a reverse mortgage, senior homeowners do not have to make monthly mortgage payments. Instead, the bank gives money to the homeowner, either in a lump sum, equal fixed payments every month, as a line of credit, or as a combination of those options. Unlike a traditional mortgage, where the loan balance starts high and gets smaller as the homeowner makes payments, a reverse mortgage amortizes backwards, with the principal amount growing over time.
Reverse mortgage loans do not have to be repaid until the last surviving homeowner on the mortgage dies, relocates, or lives somewhere else for more than 12 months (this includes going into a nursing home). Note that with a reverse mortgage, the loan may become due and payable if the homeowner fails to pay their property taxes and insurance, or if they let the home fall into disrepair or neglect. This is why it’s important to fully understand your financial abilities before committing to a reverse mortgage program. Senior homeowners must also keep their physical abilities in mind, as they will need to continue to take care of the home and keep it in good shape. If chronic illness or nursing home care is a likely possibility in the near future, senior homeowners should think very carefully before taking out a reverse mortgage and they should consider how the mortgage might affect their spouse, children or other people who are close to them.
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Reverse Mortgage Funds
When it comes to healthcare expenses, senior citizens are one of the most affected demographics. There are two main reasons for this: First, senior citizens are more likely to be on fixed incomes, since they are either retired, approaching retirement or they are only able to work part-time. Second, senior citizens generally have more health care needs than other age groups. These factors combine to make paying for health care a daunting task for many older Americans. With a reverse mortgage, the homeowner can use the money they receive to help cover medical bills, making it a lot easier to handle other expenses and preventing the homeowner from having to do without other necessities.
Because there are really no restrictions on how reverse mortgage borrowers can use their proceeds, there’s a lot of freedom in choosing how to spend it. For people who are struggling to pay their bills and cover medical costs, reverse mortgage proceeds can offer much needed relief. Even homeowners who have Medicare/Medicaid may find that these programs can fall short when it comes to paying for certain things. But because reverse mortgage funds can be used for practically anything, homeowners don’t have to worry about whether or not an item or procedure is “covered.”
Here are just a few medical care costs that can be covered by reverse mortgage proceeds:
- Prescription medication
- One-time procedures not covered by insurance
- Long-term treatment plans
- Visits to nutritionists, psychologists, or other specialists
- Emergency medical care
- Covering deductibles
If you’re curious about whether a reverse mortgage is right for you, consult a professional reverse mortgage lender in your area. Alpha Mortgage’s Reverse Mortgage Banking Division is a trusted source for reverse mortgage products and information, proudly serving the states of North Carolina, Virginia, and South Carolina. Please call (855) 367-4326 or visit online for more information.