Reverse Morgages and Long-Term Care

Home Equity conversion could have a dramatic impact on seniors’ ability to afford private long-term care insurance.  Increasingly, senior homeowners have found the means to make initial and future premium payments through a reverse mortgage.  Some of the proceeds from a growing credit line, for example, could be used by a couple or an individual to pay all or most of the annual premium for either an existing or new long-term care insurance policy.  Additionally, the growth in the appreciated value of unused credit line funds could be used to offset any future increases in the premium rates.

For example, a 79-year old single female who owns a $100,000  home free and clear could receive a credit line account of $66,149 that grows larger each year by 3.18 percent through the HUD-insured Home Equity Conversion Mortgage (HECM) program. The HECM is the most popular reverse mortgage product in the marketplace today.

The flexibility and number of uses to which a reverse mortgage may be put is just one reason why reverse morgage volumes are at record levels, according to the Department of Housing and Urban Development (HUD).  The number of reverse mortgages have more than quadrupled since the early 1990s when the product was first introduced.  In one the most recent federal fiscal year reports, lenders closed 13,049 federally-insured reverse mortgage loans.  A 63 percent increase over the prior year!

Questions?  Call me, Laura Strickler, at 518-9839.