Here are 2 ways to use a reverse mortgage to pay for in-home health care:
1. Set-up an Income Advantage Line of Credit – Our reverse mortgage lender will deposit a fixed amount each month into the clients bank account (ex: $2000/month). Interest is only charged on the amount the client is advanced, making this a low cost option over a period of 5 – 8 years. As with any reverse mortgage product, no payments are required until the home is sold or until the last person on title dies.
2. Invest a Lump Sum into a Monthly Income Fund – families working with their financial advisor are able to invest the reverse mortgage proceeds into a mutual fund that has a monthly disbursement. If the client needs more than the anticipated monthly return, a return of capital option is exercised to top up the amount needed. No payments on the reverse mortgage, but interest is now tax-deductible because the $ was invested.
Both options have their pro’s and con’s. The Income Advantage Line of Credit is best suited for clients who do not have any appetite for market volatility. Investing the proceeds is a longer term solution and is best suited for clients who are used to value investing and understand their investment will fluctuate over time.