If you are helping an aging loved one plan for their financial future, and especially if you think long-term care costs may be a problem, a reverse mortgage may be an excellent solution if your loved one has equity in their home. A reverse mortgage has several benefits, including:
- Your loved one cannot be forced to sell the home
- Can increase monthly income, or provide a lump sum of tax free cash
- Any remaining value on the home when it is sold goes to the homeowner or his or her heirs
While a reverse mortgage can help solve many of the financial burdens of aging, there are a few negative points to consider:
- Origination fees
- Inspection fees
- Appraisal and title fees
- Mortgage insurance
- Closing costs
- Monthly service fees
How Much Can You Borrow?
Limits for reverse mortgages can vary, depending on where the home is located. The Home Equity Conversion Mortgage is the most popular option, with nine out of every 10 being this type of loan, and has a maximum loan limit of $312,896. The Fannie Mae Home Keeper loan is the next popular, and it has a limit of $359,650.
