Owning your own home can be a wonderful thing, and it’s certainly an accomplishment, but it also has a lot more perks than you might initially think. For example, owning your own home provides you with an asset that you can borrow against when you need help paying for long-term care. Elderly adults are able to use their home’s equity to pay for any necessary long-term care. This can work to get rid of a lot of pressure on other family members and help provide adequate care to older adults as they continue to age.
Most conventional home equity loans are used to pay off things like any existing debts, mortgages, or make any home repairs. Although, the home equity isn’t completely free, since you have to pay the loan back with interest on top of that.
Conversion Mortgage Loans
The HECM (Home Equity Conversion Mortgage) reverse mortgage program, put in to place by the Federal Housing Administration, is a government program designed to help elderly homeowners get to and use the equity in their homes. While the program operates in much the same way as a conventional home equity loan, there are a number of options for payment available to you, and each one is in place to meet a specific need:
- Tenure—This offers equal monthly payments for as long as the person borrowing remains alive and keeps the property as principal residence.
- Term—It requires equal monthly payments, like a tenure plan, but these are made for a fixed period of time, specified by the borrower.
- Line of Credit—Different from tenure and term plans, these plans allow for unscheduled payments at a specific time stated by the borrower, as well as in the amount the borrower requests until the line of credit is no more.
- Modified Tenure—This combines both scheduled monthly payments and unscheduled payments on demand, but only so long as the borrower keeps their home as the primary residence.
- Modified Term—This option combines scheduled monthly payments and unscheduled payments on demand for a fixed period, as determined by the borrower. Seguir leyendo «Using Home Equity to Pay for Long Term Care»